Indian stock market suffered their steepest decline in more than two months on Wednesday after US President Donald Trump declared the peace memorandum with Iran was "over," dashing hopes of sustained de-escalation in West Asia and triggering a sharp rally in crude oil prices that rattled global markets.
Key Highlights
- Stock market crashes with Sensex plunging 2.15% and Nifty 2.12%.
- Brent crude surged over 6% to $79 a barrel after Trump declared US-Iran peace deal "over."
The BSE Sensex plunged 1,677.12 points, or 2.15%, to close at 76,503.60, while the Nifty 50 slumped 516.65 points, or 2.12%, to settle at 23,882.05 - marking their biggest single-day fall in over two months. The selloff was broad-based, with 46 of the 50 Nifty constituents ending in the red as investors rushed to cut risk amid fears of renewed US-Iran conflict.
The pressure spilled into the currency market, with the rupee tumbling 63 paise to settle at 95.59 (provisional) against the US dollar, tracking higher crude prices and a stronger greenback.
Peace Hopes Unravel, Oil Jumps Over 6%
Markets came under pressure after the US launched fresh strikes on more than 80 Iranian military targets late Tuesday, prompting Iran to retaliate with missile and drone attacks on US bases. Sentiment deteriorated further after Trump declared the US-Iran peace memorandum "over," though he indicated diplomacy could continue if Tehran was willing to negotiate. Traders quickly repriced geopolitical risk, sending Brent crude surging more than 6% to around $79 a barrel - its sharpest single-day jump in weeks - on fears that renewed hostilities could keep energy markets on edge even without an immediate supply disruption.
Global Markets Also Feel the Heat
The risk-off sentiment reverberated globally. Japan's Nikkei 225 fell 2.11%, while South Korea's Kospi plunged 5.35% on heavy tech-stock selling. European equities also traded lower, though Hong Kong's Hang Seng bucked the trend with a 2.99% gain, supported by Chinese technology shares.
Also Read: Sensex and Nifty End Four-Day Rally as Oil Prices Rise
Banks and Financials Bear the Brunt
The selloff spared no sector. Banking and financial stocks led the decline - Nifty PSU Bank dropped 2.72%, followed by Private Bank (-2.52%), Financial Services (-2.45%), FMCG (-2.49%), Media (-2.31%), Auto (-2.23%), and Oil & Gas (-2.23%). Defensive sectors also came under pressure, though IT (-1.37%) and Pharma (-0.97%) outperformed the broader market.
Among individual stocks, IndiGo was the biggest loser, sliding 5.10% on renewed aviation fuel cost concerns, followed by Jio Financial Services (5.02%), Shriram Finance (4.86%), Maruti Suzuki (3.88%), and Hindustan Unilever (3.36%). Only four stocks escaped the rout: ONGC gained 1.15% on higher crude prices, while Bajaj Auto, Hindalco, and Coal India posted modest gains.
Outlook: Volatility Likely to Stay Elevated
Vishnu Menon, SEBI-registered research analyst and founder of Trader Prepares, said the sharp decline reflected a shift toward risk aversion following the latest geopolitical developments. "The selloff was broad-based, with every sectoral index closing in the red. Banking and financial stocks led the fall, while even defensive sectors were not spared," he said, adding that investors should track developments in the Gulf, crude oil prices, the rupee, FII flows, and the June-quarter earnings season for cues on market direction. "Crude oil trajectories and further developments in the Gulf will dictate the narratives around inflation, interest rates and FII flows. With sentiment remaining fragile, volatility is likely to stay elevated," he added.
