Sensex falls 600 points, Nifty below 23,000: Oil above $100 among 7 triggers behind today's D-St crash
Indian stock markets experienced a significant downturn for the fourth consecutive session, with Sensex and Nifty 50 falling sharply. Elevated crude oil prices, driven by the ongoing Iran-Israel-US conflict and disruptions in the Strait of Hormuz,...
By Debaroti Adhikary, ETMarkets.com | Updated:
ETMarkets.com
Indian stock markets slipped into the red for the fourth consecutive session, with Sensex dropping more than 600 points lower and Nifty 50 falling below 22,000 for the first time since April 2025 on Monday. This comes as crude oil prices remain elevated as the war between Iran and Israel-US continues, despite assurances from the Trump administration for safe transit for ships through the Strait of Hormuz.
Sensex declined over 610 points to 73,952, while the Nifty 50 index declined 183 points to 22,968, as seen at 10.56 am. This comes after the benchmark indices crashed around 8% last week, pushing Sensex below 75,000 and Nifty below 23,200.
Bharat Electronics, Power Grid, Tata Consultancy Services (TCS), Infosys, NTPC and Bharti Airtel were among the top losers on Sensex, falling 2-3%. UltraTech Cement, IndiGo, Tata Steel and HDFC Bank were among the top gainers.
The sharp selloff wiped off nearly Rs 5 lakh crore from the total market capitalization of all companies listed on BSE, dragging it down to around Rs 425 lakh crore.
Here are the key factors behind the market slump today:
1) Iran-Israel war continues to escalate
US President Donald Trump said on Sunday that his administration is in talks with seven countries to help secure the Strait of Hormuz amid the hostilities, calling on them to help protect ships in the vital waterway that Tehran has mostly blocked to oil tanker traffic.
"I'm demanding that these countries come in and protect their own territory because it is their territory," Trump told reporters aboard Air Force One on the way from Florida to Washington. "It's the place from which they get their energy."
Trump also said Washington is in contact with Iran but expressed doubt that Tehran is prepared for serious negotiations to end the conflict. Iranian Foreign Minister Abbas Araqchi meanwhile said that the country is ready to defend itself for as long as it takes.
2) Crude oil above $100
Oil prices continue to hold above the key psychological mark of $100 per barrel as any diplomatic resolution to the raging war between Iran and Israel-US still remains elusive, leading to expectations of prolonged closure of the Strait of Hormuz.
Oil prices soared to multi-month highs since the outbreak of the war earlier this month after US and Israel’s military strikes on Iran killed its former supreme leader Ayatollah Khamenei, followed by massive retaliation from Tehran.
The Strait of Hormuz, which remains a critical chokepoint for trade, effectively remains shut for traffic as Iran attacks any ship trying to pass through, leading to the rally in oil prices. The narrow 33 kilometre long waterway connects the Persian Gulf and the Gulf of Oman, and carries over 20% of the world’s oil and gas shipments.
Brent crude futures gained more than 1.5% to trade at $104.7 per barrel, while WTI Crude rose over 0.7% to $99.45 per barrel, as seen at 11 am. The sharp surge comes despite bleak assurances by the US administration.
US President Donald Trump-led administration plans to announce that several countries have agreed to form a coalition to escort ships through the Strait of Hormuz, Wall Street Journal reported. Trump meanwhile told Financial Times that it would be very bad for the future of NATO if the allies did not help.
Global crude oil prices could rise to $120 per barrel in the short term and potentially reach $150 per barrel if war extends over a month and geopolitical tensions continue in West Asia, said Kayanat Chainwala, Assistant Vice President at Kotak Securities.
3) Rupee nears record low
Indian rupee was trading at around 92.4650 against the US dollar, in touching distance of its lifetime low of 92.4750 which it had hit last week. Rupee has seen a notable decline against the US dollar, as the safe-haven appeal of the American greenback shines amid geopolitical tensions. Oil movements remain a key driver for the rupee, which tends to widen India’s import bill and weigh on the currency, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities said.
4) FII sell Indian equities worth Rs 68 lakh crore in 11 days
FII extended their selling streak for the 11th consecutive session on Friday, net selling Indian equities worth around Rs 68 lakh crore during the period. Foreign investors net sold Indian equities worth Rs 10,717 crore on Friday.
While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors seen for the past several sessions dampens investor sentiment.
5) Global markets
Global markets remained volatile, with Japan’s Nikkei falling nearly 1% and China’s Shanghai Composite declining 0.9%. Hong Kong’s Hang Seng however gained more than 1%, and South Korea’s Kospi was hovering in the green with marginal gains.
European markets closed in the red on Friday, with France’s CAC falling more than 0.9%, Germany’s DAX declining 0.6% and UK’s FTSE falling 0.43%. Wall Street also extended their decline on Friday, with Nasdaq declining over 0.9% and S&P 500 falling 0.6%.
6) Bond yield
US government bond yields remained volatile after the release of slower, downwardly revised fourth-quarter gross domestic product growth numbers for the country. The two-year note yield fell 3.5 bps to 3.727% after hitting its highest level since August 22 on Thursday. U.S. 10-year notes rose up to 4.281%
7) US-Iran war impact on Indian economy
While India is not directly involved in the war between Iran and US-Israel, the rising oil prices and other factors may bear an impact on the Indian economy in the short term, as per analysts. “With 80% energy import dependence, higher crude prices directly impact the growth, current account deficit (CAD), inflation, the rupee, and fiscal balances. The overall macro effect will depend on the pass-through to consumers and government interventions through duties, subsidies, and fuel price controls,” said Motilal Oswal Financial Services.
“A USD10pb rise in oil could add 30–50bp to inflation, with CPI potentially approaching 5% if crude averages USD100pb. These risks are further amplified by shipping disruptions, higher war-risk insurance premiums, rising fertilizer prices, and vulnerabilities in LPG supply, increasing the likelihood of broader energy and food price pressures,” the brokerage added.
What lies ahead?
With the uncertainty surrounding the war continuing, markets are in uncharted territory, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. “The sustained heavy selling by FIIs and the weakness in rupee are contributing to the market weakness. In the near-term FIIs are likely to continue selling in the market, particularly when there is a mild rally in the market. This will add to the weakness in the market, even in fundamentally sound sectors and stocks,” he added.
How the high crude prices impact India’s GDP growth and corporate earnings, going forward, will depend on the duration of the war, the analyst noted. “There are times when doing nothing is a good strategy. This appears to be the case now. However, investors with risk appetite can certainly nibble at high quality stocks across sectors, now available at fair valuations. In the broader market there are growth stocks available at attractive valuations. Even in the weak market environment, pharmaceuticals and telecom stocks are exhibiting resilience,” he further said.
Technical view
Nifty 50 on weekly chart has formed a sizable bearish candle with a lower high and a lower low, signaling continuation of the corrective decline, according to Bajaj Broking. It added that the index in the process slipped to 11 months low and breached 100 weeks EMA and rising trendline joining the lows of CY23 and CY25.
“Index trends remain down as it continues to form lower high and lower low in the short-and medium-term time frame. With key support on the downside to watch out for is placed around 22,700-22,400. The sharp decline has pushed daily oscillators into oversold territory, with the 14-period RSI below 30. A short-term pullback is possible, but there are no clear reversal signals yet. The index needs to start forming higher highs and higher lows on a sustained basis and close above last week's high 24,303 to signal a pause or reversal in the downtrend,” it added.
(With inputs from agencies)
Sensex declined over 610 points to 73,952, while the Nifty 50 index declined 183 points to 22,968, as seen at 10.56 am. This comes after the benchmark indices crashed around 8% last week, pushing Sensex below 75,000 and Nifty below 23,200.
Bharat Electronics, Power Grid, Tata Consultancy Services (TCS), Infosys, NTPC and Bharti Airtel were among the top losers on Sensex, falling 2-3%. UltraTech Cement, IndiGo, Tata Steel and HDFC Bank were among the top gainers.
The sharp selloff wiped off nearly Rs 5 lakh crore from the total market capitalization of all companies listed on BSE, dragging it down to around Rs 425 lakh crore.
Here are the key factors behind the market slump today:
1) Iran-Israel war continues to escalate
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Despite bleak assurances by the US President, the war in the Middle East continued to escalate over the weekend. Trump threatened more strikes on Iran's main oil export hub Kharg Island over the weekend and said he was not ready to reach a deal to end the war which has shut off the vital Strait of Hormuz.US President Donald Trump said on Sunday that his administration is in talks with seven countries to help secure the Strait of Hormuz amid the hostilities, calling on them to help protect ships in the vital waterway that Tehran has mostly blocked to oil tanker traffic.
"I'm demanding that these countries come in and protect their own territory because it is their territory," Trump told reporters aboard Air Force One on the way from Florida to Washington. "It's the place from which they get their energy."
Trump also said Washington is in contact with Iran but expressed doubt that Tehran is prepared for serious negotiations to end the conflict. Iranian Foreign Minister Abbas Araqchi meanwhile said that the country is ready to defend itself for as long as it takes.
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2) Crude oil above $100
Oil prices continue to hold above the key psychological mark of $100 per barrel as any diplomatic resolution to the raging war between Iran and Israel-US still remains elusive, leading to expectations of prolonged closure of the Strait of Hormuz.
Oil prices soared to multi-month highs since the outbreak of the war earlier this month after US and Israel’s military strikes on Iran killed its former supreme leader Ayatollah Khamenei, followed by massive retaliation from Tehran.
ADVERTISEMENT
The Strait of Hormuz, which remains a critical chokepoint for trade, effectively remains shut for traffic as Iran attacks any ship trying to pass through, leading to the rally in oil prices. The narrow 33 kilometre long waterway connects the Persian Gulf and the Gulf of Oman, and carries over 20% of the world’s oil and gas shipments.
Brent crude futures gained more than 1.5% to trade at $104.7 per barrel, while WTI Crude rose over 0.7% to $99.45 per barrel, as seen at 11 am. The sharp surge comes despite bleak assurances by the US administration.
US President Donald Trump-led administration plans to announce that several countries have agreed to form a coalition to escort ships through the Strait of Hormuz, Wall Street Journal reported. Trump meanwhile told Financial Times that it would be very bad for the future of NATO if the allies did not help.
Global crude oil prices could rise to $120 per barrel in the short term and potentially reach $150 per barrel if war extends over a month and geopolitical tensions continue in West Asia, said Kayanat Chainwala, Assistant Vice President at Kotak Securities.
3) Rupee nears record low
Indian rupee was trading at around 92.4650 against the US dollar, in touching distance of its lifetime low of 92.4750 which it had hit last week. Rupee has seen a notable decline against the US dollar, as the safe-haven appeal of the American greenback shines amid geopolitical tensions. Oil movements remain a key driver for the rupee, which tends to widen India’s import bill and weigh on the currency, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities said.
4) FII sell Indian equities worth Rs 68 lakh crore in 11 days
FII extended their selling streak for the 11th consecutive session on Friday, net selling Indian equities worth around Rs 68 lakh crore during the period. Foreign investors net sold Indian equities worth Rs 10,717 crore on Friday.
While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors seen for the past several sessions dampens investor sentiment.
5) Global markets
Global markets remained volatile, with Japan’s Nikkei falling nearly 1% and China’s Shanghai Composite declining 0.9%. Hong Kong’s Hang Seng however gained more than 1%, and South Korea’s Kospi was hovering in the green with marginal gains.
European markets closed in the red on Friday, with France’s CAC falling more than 0.9%, Germany’s DAX declining 0.6% and UK’s FTSE falling 0.43%. Wall Street also extended their decline on Friday, with Nasdaq declining over 0.9% and S&P 500 falling 0.6%.
6) Bond yield
US government bond yields remained volatile after the release of slower, downwardly revised fourth-quarter gross domestic product growth numbers for the country. The two-year note yield fell 3.5 bps to 3.727% after hitting its highest level since August 22 on Thursday. U.S. 10-year notes rose up to 4.281%
7) US-Iran war impact on Indian economy
While India is not directly involved in the war between Iran and US-Israel, the rising oil prices and other factors may bear an impact on the Indian economy in the short term, as per analysts. “With 80% energy import dependence, higher crude prices directly impact the growth, current account deficit (CAD), inflation, the rupee, and fiscal balances. The overall macro effect will depend on the pass-through to consumers and government interventions through duties, subsidies, and fuel price controls,” said Motilal Oswal Financial Services.
“A USD10pb rise in oil could add 30–50bp to inflation, with CPI potentially approaching 5% if crude averages USD100pb. These risks are further amplified by shipping disruptions, higher war-risk insurance premiums, rising fertilizer prices, and vulnerabilities in LPG supply, increasing the likelihood of broader energy and food price pressures,” the brokerage added.
What lies ahead?
With the uncertainty surrounding the war continuing, markets are in uncharted territory, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. “The sustained heavy selling by FIIs and the weakness in rupee are contributing to the market weakness. In the near-term FIIs are likely to continue selling in the market, particularly when there is a mild rally in the market. This will add to the weakness in the market, even in fundamentally sound sectors and stocks,” he added.
How the high crude prices impact India’s GDP growth and corporate earnings, going forward, will depend on the duration of the war, the analyst noted. “There are times when doing nothing is a good strategy. This appears to be the case now. However, investors with risk appetite can certainly nibble at high quality stocks across sectors, now available at fair valuations. In the broader market there are growth stocks available at attractive valuations. Even in the weak market environment, pharmaceuticals and telecom stocks are exhibiting resilience,” he further said.
Technical view
Nifty 50 on weekly chart has formed a sizable bearish candle with a lower high and a lower low, signaling continuation of the corrective decline, according to Bajaj Broking. It added that the index in the process slipped to 11 months low and breached 100 weeks EMA and rising trendline joining the lows of CY23 and CY25.
“Index trends remain down as it continues to form lower high and lower low in the short-and medium-term time frame. With key support on the downside to watch out for is placed around 22,700-22,400. The sharp decline has pushed daily oscillators into oversold territory, with the 14-period RSI below 30. A short-term pullback is possible, but there are no clear reversal signals yet. The index needs to start forming higher highs and higher lows on a sustained basis and close above last week's high 24,303 to signal a pause or reversal in the downtrend,” it added.
(With inputs from agencies)
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