Global markets, including India, on Monday came under pressure in a global risk-off move following the eruption of a growing conflict between Israel and the Palestinian Islamist group Hamas. The BSE Sensex fell by 0.73 per cent, or 483 points, to 65,512.39 and the NSE Nifty index fell 141 points to 19,512.35 in the sell-off.

If the war persists for a long time, stocks and the rupee are likely to come under pressure, analysts cautioned. On Wall Street, stocks sank ahead of the bell on Monday as the Middle East conflict added a dose of geopolitical risk to the interest-rate and inflation concerns already facing markets. Dow Jones futures dropped roughly 0.5 per cent or about 175 points. S&P 500 futures lost about 0.6 per cent, while contracts on the tech-heavy Nasdaq 100 fell over 0.8 per cent.

The Middle East conflict pushed investors toward safe-haven assets as this negative trigger is the latest in the list including the macro-economic uncertainties in Europe and China, hawkish central banks and already rising oil prices. While foreign investors pulled out close to Rs 1,000 crore from the cash market on Monday, domestic institutions led by mutual funds and insurance companies prevented a bigger fall by purchasing stocks worth Rs 2,661 crore.

“An unforeseen escalation in the Middle East has rekindled pessimism in global markets. Moreover, the rapid surge in oil prices presents a significant threat to the global market, which is already dealing with elevated inflation and interest rates. In the mid- and small-cap segments, we observe consolidation as investors reshuffle their portfolios due to premium valuations in this space,” said Vinod Nair, Head of Research at Geojit Financial Services.