India’s benchmark equity indices plunged in early trade on Monday as escalating tensions in the ongoing US-Iran conflict rattled global markets and triggered fears of prolonged inflation and higher crude oil prices. The BSE Sensex tanked 845.68 points to 76,482.51 in opening trade, while the NSE Nifty fell 237.90 points to 23,936.85.
Investor sentiment weakened after US President Donald Trump rejected Iran’s latest peace proposal, raising concerns that the conflict in West Asia could drag on longer than expected.
The drop also comes a day after PM Modi urged Indians to adopt austerity measures to reduce the economic fallout of the US-Iran war.
Brent crude surged 4.1% to around $105.5 a barrel amid fears of prolonged supply disruptions in the Strait of Hormuz, a key global oil shipping route.
The sharp rise in crude prices also battered the rupee, which crashed 139 paise to 94.90 against the US dollar in early trade. Forex traders attributed the fall to rising oil prices, a strengthening dollar and continued foreign institutional investor (FII) outflows.
“All 16 major sectors logged losses at the open,” market data showed, while broader mid-cap and small-cap indices slipped 0.5% each.
Oil marketing companies such as Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation fell around 1% each as investors worried about rising under-recoveries due to elevated crude prices.
Travel and aviation-linked stocks also came under pressure after Prime Minister Narendra Modi urged citizens to reduce fuel consumption, avoid non-essential foreign travel and postpone gold purchases amid the global crisis.
Jewellery stocks including Titan Company, Senco Gold and Kalyan Jewellers fell between 3% and 4.5%, while airline operator InterGlobe Aviation dropped 3.2%.
Analysts said higher crude oil prices pose a major risk for India, the world’s third-largest oil importer, as they increase inflationary pressures, widen the import bill and weigh on corporate earnings and economic growth.
Meanwhile, foreign institutional investors sold equities worth ₹4,110.60 crore on Friday, according to exchange data. India’s forex reserves also fell by USD 7.794 billion to USD 690.693 billion in the week ended May 1, according to RBI data.
