Sensex slips 100 pts, Nifty below 24,100 as fading peace hopes and surging oil prices spook investors

Sensex and Nifty slipped into the red on Tuesday after a sharp rally the previous day, as fading hopes for a quicker resolution to the war between Iran and US spooked investors and retriggered the skyrocketing rally in oil prices.

Sensex declined over 100 points to 77,195, while Nifty traded marginally lower below 24,100, as seen at 9.25 am on Tuesday.

Broader markets continue to outperform, with Nifty Smallcap 100 and Nifty Midcap 100 indices rising up to 0.3% to trade in the sharp green. This came as India VIX, which measures volatility in the market, dropped around 7% to 18.38 in the early trading hours.


State Bank of India (SBI), Axis Bank, Sun Pharma, and IndiGo shares were the top losers on Sensex, falling around 1% each. Bucking the trend, Adani Ports, TCS, L&T and M&M gained around 1% each.

Sectorally, Nifty PSU Bank index declined 1.5% to emerge as the top loser. Nifty Realty meanwhile traded in the green with marginal gains. Around 837 stocks declined while 1,547 advanced and 118 remained unchanged on NSE.

"Overall, markets are entering a consolidation phase, balancing strong earnings momentum against macro and geopolitical uncertainties, with near-term direction hinging on central bank commentary and incoming data," said Bajaj Broking.

Iran-US peace deal remains elusive
After reports claimed that Iran has given United States a new proposal on reopening of the Strait of Hormuz and ending of the war, US President Donald Trump indicated on Monday that he is inclined to reject the most recent diplomatic overture from Tehran aimed at halting current hostilities, according to a report by CNN, which added that Trump is currently "not satisfied with Iran's latest proposal to reopen the Strait of Hormuz and end the war."

On the diplomatic front, Tehran has looked toward its allies for support while tensions with Washington persist. Iranian Foreign Minister Abbas Araghchi travelled to Moscow on Monday for talks with Russian President Vladimir Putin. This comes after Trump cancelled his envoys' trip to Pakistan, to sit on the negotiation table with Iranian officials to put the months-long war to an end.

Oil prices march towards $110/barrel
As a result of the rising tensions and expectations of prolonged closure of the Strait of Hormuz, oil prices soared close to the $110 per barrel mark. Brent crude futures were trading around 1% higher above $109 per barrel on Tuesday morning, after briefly crossing $110 in the early trading hours.

After comfortably falling below the $100 per barrel mark earlier this month, oil prices soared back above the crucial level last week as fresh attacks near the Strait of Hormuz spooked investors about supply concerns.

Global markets
Asian markets remained mixed, with Japan’s Nikkei falling around 1% after the Bank of Japan held its policy rate unchanged while raising its inflation forecast amid the raging war in the Middle East. South Korea’s Kospi meanwhile gained around 1%. Hong Kong’s Hang Seng and China’s Shanghai Composite were in the red.

Wall Street extended gains on Monday, with Nasdaq and S&P inching closer to record highs. European markets however closed in the red yesterday.

FII selling continues
Foreign investors continued to remain net sellers of Indian equities, net selling shares worth Rs 1,151 crore on Monday, according to provisional data on NSE. While this does not reflect their behaviour today, persistent FII selling dampens investor sentiment.

“It is important to understand the principal reason behind sustained FII selling in India. India underperformed hugely in 2025 and this trend is continuing in 2026, too. S&P 500 set new records this year. Kospi is up 55% YTD and Taiex is up 35% YTD while Nifty is down 7.8% YTD. The principal reason behind this underperformance is the booming AI trade which began in 2025 and is continuing this year. A few AI stocks are driving this AI trade globally. Bulk of portfolio flows are hot money that chase momentum. So long as this market momentum continues, FIIs are likely to continue selling,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

The analyst, however, noted that the dominant market trends are temporary. There are strong views that there is a bubble in AI stocks. So there can be a correction in this segment any time, he said. “That can be a trigger for resumption of portfolio flows into India. Investors should watch out for this trend. When that happens, fairly-valued largecaps will outperform. Till then, the mid and smallcaps which don’t have significant FII exposure may continue to outperform,” he added.

Rupee weakens
Rupee fell 24 paise to 94.39 against the US dollar in early trade. This comes a day after the Indian currency recovered slightly against the American greenback, with analysts continuing to advise caution.

“Going ahead, rupee direction will largely depend on US dollar movement and FII flows, while the upcoming Fed policy decision will be a key trigger for global currency trends. In the near term, rupee is expected to trade in a range of 93.75–94.50, with volatility likely to remain elevated,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities.

(With inputs from agencies)
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