Markets Melt as Iran and US Engage in Hostilities Again, with Trump Saying Peace Deal Over

Mumbai, July 8: Indian equity benchmarks logged their steepest fall in over three months on Wednesday as escalating tensions between the US and Iran triggered a global risk-off mood, sending crude oil prices higher and sparking broad-based selling across domestic equities.

The BSE Sensex plunged 1,677.12 points, or 2.15%, to close at 76,503.60, while the NSE Nifty50 tumbled 516.65 points, or 2.12%, to settle at 23,882.05, slipping below the crucial 23,900 mark. Market breadth remained sharply negative, with 3,070 stocks declining against 1,023 advancing, while 159 shares ended unchanged.

Geopolitical Tensions Rattle Markets

The selloff followed a fresh flare-up in geopolitical tensions after the US and Iran traded blows, raising fears of supply disruptions in the Middle East and pushing crude oil prices higher. To make things worse, US President Donald Trump said a peace memorandum with Iran was “over”.

Sensex fell and fell as Iran and US resumed hostilities again, dimming prospects for peace. Source: BSE

The spike in oil prices weighed on investor sentiment, given India’s heavy dependence on crude imports and the potential impact on inflation, corporate margins and the fiscal deficit.

The sharp jump in the India VIX—up 26%—underscored the heightened nervousness among investors as traders rushed to reduce risk.

Banks, Oil-Sensitive sectors Lead the Decline

Selling was broad-based, with all major sectoral indices ending in the red.

Banking and financial stocks bore the brunt of the selling. The Nifty PSU Bank index dropped 2.7%, while the Nifty Bank and Nifty Private Bank indices fell 2.5% each. FMCG and Media shares also witnessed sharp declines, with their respective indices losing 2.5% and 2.3%.

Oil-sensitive sectors remained under pressure as investors priced in the possibility of sustained higher crude prices. The Nifty Oil & Gas and Auto indices each declined about 2.2%, while the Infrastructure index fell 2%. Pharma proved relatively resilient, slipping just 0.97%, while the Metal index lost 0.9%.

Jio Financial, IndiGo among top laggards

Among the Nifty50 constituents, InterGlobe Aviation emerged as the biggest loser, followed by Jio Financial Services, Shriram Finance, Maruti Suzuki India and Hindustan Unilever.

Nifty 50 bled so much as crude-sensitive stocks slumped all over the index. Source: NSE

Aviation stocks remained under pressure on concerns that rising aviation turbine fuel (ATF) prices could squeeze profitability, while auto companies declined amid fears that higher fuel costs could hurt demand.

On the positive side, ONGC bucked the broader trend as rising crude prices boosted sentiment for upstream oil producers. Hindalco Industries, Coal India and Bajaj Auto were the only notable gainers on the benchmark index of Nifty 50.

Broader Markets under Pressure

The weakness extended beyond frontline stocks. The Nifty Midcap 100 index declined 1.5%, while the Nifty Smallcap 100 index fell 2.2%, indicating widespread profit booking across the broader market.

Eyes on Crude, Earnings Season

Going forward, investors will closely monitor developments in the Middle East and movements in crude oil prices for further direction. Attention will also turn to the June-quarter earnings season, with management commentary on demand trends, input costs and the impact of elevated energy prices likely to dictate stock-specific action in the coming weeks.

Source: NSE, BSE