Indian Markets Decline as US-Iran Tensions Escalate

Benchmark equity indices declined by nearly 1% on Monday, starting the week on a weak note after peace talks between the US and Iran collapsed over the weekend. Brent crude prices surged by nearly $9 per barrel to $103.87 after US President Donald Trump threatened to blockade vessels passing through the Strait of Hormuz . After opening gap-down by over 1,600 points (more than 2%), the Sensex staged a gradual recovery of about 980 points from the day’s low and eventually closed at 76,847.57, down 702.68 points, or 0.91%. The Nifty fell 495 points, or 2.06%, intraday but pared losses to end at 23,842.65, down 207.95 points, or 0.86%. The Sensex and Nifty were among the worst performers across major Asian equity markets. Besides India, Hong Kong, South Korea, and Japan were the top losers, while Thailand and Indonesia emerged as the top gainers. Ajit Mishra, SVP – Research at Religare Broking, said the weakness was primarily driven by escalating geopolitical tensions following the collapse of US–Iran talks, which triggered a sharp spike in crude oil prices and weighed on global sentiment. He added that fresh weakness in the rupee, continued foreign institutional outflows, and subdued global equity markets further dampened investor confidence. The India VIX Index surged 8.75% to close at 20.50, indicating a rise in market volatility. “Markets continue to derive limited support from last week’s ceasefire framework, which remains intact for now and is encouraging selective buying interest through a buy-on-dips approach. This comes despite an initial negative reaction to the breakdown of US–Iran peace talks and the announcement of a US naval blockade in the Strait of Hormuz, which pushed crude prices above $100 per barrel,” said Vinod Nair, Head of Research, Geojit Investments. He added that elevated oil prices are raising concerns around inflation, currency stability, and broader macroeconomic balances, thereby weighing on overall sentiment. Investor wealth declined by Rs 2.10 lakh crore to Rs 449.13 lakh crore. Overall market breadth remained negative, with 2,577 losers against 1,788 gainers on the BSE. Foreign portfolio investors sold shares worth Rs 1,983.18 crore ($212.4 million) and domestic institutional investors bought shares worth Rs 2,432.30 crore respectively, as per provisional data by the BSE. On the sectoral front, auto , oil & gas, FMCG , IT, and PSU banks were the top losers, declining by up to 2.09%. Among Sensex constituents, Maruti Suzuki , IndiGo, Bajaj Finance , Reliance Industries , and TCS were the top laggards, falling by up to 4.60%. HDFC Bank and Reliance Industries together contributed 414 points, or 59%, to the Sensex’s 702-point decline.