After opening, Sensex tumbled nearly 1,436 points to 73,097, while Nifty 50 tumbled over 430 points to 22,681. The sharp selloff wiped off nearly Rs 5 lakh crore from the total market capitalisation of all companies listed on BSE, dragging it down to Rs 424 lakh crore.
All 30 constituents of Sensex were trading in the red, with Tata Steel, State Bank of India (SBI), HDFC Bank, Bajaj Finance, Titan and Mahindra & Mahindra (M&M) falling 2-3% and leading losses on the benchmark index.
On NSE, all sectoral indices were in the red. Nifty Metal and Nifty PSU Bank indices were the top sectoral losers, falling more than 3% on Monday morning. Nearly 2,328 stocks declined on the stock exchange, while 249 advanced and 74 remained unchanged.
Here are the key factors pushing markets down today:
1) Iran-US-Israel war escalates
The ongoing war between Iran and the US-Israel sharply escalated during the weekend. While the countries continued to exchange missiles, threats from their top leaders raised worries over the conflict worsening further in the oil-rich Middle East. US President Donald Trump said that he has set a Monday deadline for Iran, warning that the US can strike Iran’s power plants unless Tehran fully reopens the Strait of Hormuz within 48 hours. In response, Iran warned it would target energy and water infrastructure across the Gulf if the US follows through on its threat.
The war has now entered its fourth week, despite brief expectations of some diplomatic resolution which, however, remained unfulfilled.
2) Oil prices above $110
Oil prices continued to remain elevated as the war between Iran and the US-Israel saw fresh escalations over the weekend. Brent crude rose to $113 per barrel on Monday morning. The prices have seen a significant surge since the onset of the conflict in the oil-rich Middle East, which saw the effective closure of the Strait of Hormuz. More than 20% of the world’s oil supply passes through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
After briefly letting ships pass through the critical waterway, Iran has now threatened to close the Strait of Hormuz “indefinitely” if the United States threatens to bomb Iranian energy facilities. This retriggered the rally in oil prices.
3) Rupee at fresh lifetime low
Indian rupee extended its sharp decline against the US dollar, opening at a fresh record low on Monday amid rising oil prices, persistent FII selling and other factors. The Indian currency fell to 93.84 against the US dollar today, breaking its previous all-time low of 93.7350 which it had hit on Friday.
Rupee, which is one of the most exposed currencies to oil price increases, has weakened nearly 3% since the war in the Middle East began. “Sustained strength in crude is expected to significantly widen India’s import bill, putting continued pressure on the domestic currency. The macro environment remains unfavourable for the rupee, with higher energy costs and persistent dollar demand weighing on sentiment. Unless crude prices ease meaningfully, the rupee is likely to stay under pressure,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. The analyst expects Rupee to trade in a weaker range of 93.00–94.25 against the US dollar in the near term.
4) Persistent FII selling
Foreign investors have been strongly selling Indian equities since the beginning of the war in the oil-rich Middle East amid a global risk-off sentiment in markets. FIIs extended their selling streak for the 16th consecutive session on Friday, net selling Indian shares worth Rs 5,518 crore, according to data on NSE.
While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.
5) US bond yield rises
The 10-year US Treasury yield climbed more than 10 basis points to cross 4.4% on Friday, the highest level in around one year. The two-year US treasury yield, which is highly sensitive to expectations around rate cuts by the Federal Reserve, meanwhile rose to 3.93%. Rising bond yields tend to make government securities more attractive relative to equities, potentially putting pressure on stock markets.
6) Global markets plunge
Globally, stock markets plunged with India’s Dalal Street being no exception. Asian markets sharply plunged on Monday, with South Korea’s Kospi plunging more than 6%. Japan’s Nikkei tumbled over 4% and Hong Kong’s Kang Seng fell 3.5%.
Wall Street had closed in the deep red on Friday, with the tech-heavy Nasdaq tumbling more than 2%. S&P 500 fell more than 1.5%. European markets also tumbled on Friday, with Germany’s DAX and France’s CAC falling around 2% each, and UK’s FTSE declining nearly 1.5%.
What lies ahead?
With the war in West Asia entering the fourth week, there is no clarity on when the war will end, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that the war is unfortunately escalating, with US President Donald Trump giving an ultimatum to Iran to open the Strait of Hormuz in 48 hours. The uncertainty is huge, and markets will be waiting and watching the outcome, he added.
“It is important to understand that the huge risk-off globally has impacted all assets, including stocks, bonds and precious metals like gold and silver. In fact, the crash in the safe-haven gold is worse than in equities,” he said. “There is nothing that investors can do during this crisis, characterised by huge uncertainty. If history is any guide, investors should not panic, but keep cool. The sharp depreciation in the rupee will benefit exporters like pharmaceuticals and autos and auto ancillaries. The beaten-down IT segment may surprise with a bounce back,” he further said.
Technical view
Rupak De, Senior Technical Analyst at LKP Securities, had seen Nifty 50 finding support at the 22,950-23,000 range, below which bearishness may re-emerge. Notably, the index has now comfortably fallen below both the support levels.
“Nifty on the weekly chart formed a Doji candle with long upper shadows highlighting intraweek volatility. Long upper shadow signals strong selling pressure at higher levels. Technically, the index continues to show a bearish bias in both the short and medium term, as it is forming a pattern of lower highs and lower lows,” said Bajaj Broking.
A move below last week’s low could lead to further downside, with the index potentially declining toward the major support area of 22,700–22,400, the domestic brokerage said. “On the higher side, the last week’s high of 23,862 is expected to act as immediate resistance, sustaining below the same will keep the immediate bias down,” it added.