Markets tumble to 18-month low as US-Iran tensions lift crude oil

Nifty slides 1.64% as rising crude prices, higher US Treasury yields and geopolitical tensions trigger broad-based selling

Fresh US-Iran tensions pushed Brent crude above $104 a barrel on Thursday, while the benchmark Nifty 50 fell 1.64 per cent and its constituents lost ₹3.18 trillion in market value. 

Reliance Industries (RIL) and HDFC Bank dragged the index, while Adani Enterprises emerged as the worst performer. The Nifty IT index was the least-hit sectoral index, even as soaring US Treasury yields and an almost 4 per cent spike in crude spot prices triggered a broad-based selloff. 

The Nifty 50 closed at 22,231.8, down 1.64 per cent from Wednesday’s close, while the Sensex closed at 71,593.24, down 1.55 per cent, according to exchange data. This was the worst fall since July 8 for the Nifty and September 28 for the Sensex, and the lowest level since April 7, 2025, for the Nifty and since February 13, 2024, for the Sensex, according to Bloomberg data. Brent crude spot stood at $105.4, up 3.59 per cent, while Brent crude futures were at $104.30, up 4.77 per cent, pushing the bourses to new 52-week lows. 

 

Infosys, Tech Mahindra, and Axis Bank were the only Nifty 50 gainers, while declines in RIL, HDFC Bank, and ITC dragged the market lower. Adani Enterprises  the Nifty 50’s worst performer, falling 5.36 per cent from Wednesday’s close. 

 

The trigger for the fall came from Washington, where traders pointed to a report that the White House had asked the Pentagon for strike options against Iran ahead of the US midterm elections. The targets include power plants, nuclear facilities, and other military sites. Meanwhile, Houthi attacks on two Saudi airports and a tanker incident in the Gulf added to the worries. This also pushed Brent prices higher. 

Dealers said the market was now paying for protection against supply disruptions. They said the market was paying higher, which is basically the risk premium, as oil was getting expensive because of fear of shortage rather than an actual supply shock.

The Indian market, which is a net importer of oil, viewed these reports as a major negative. 

“Brent is the root cause for everything actually. It is the crux or the centre point of particular volatility which we are seeing currently across the globe. Our domestic currency, the Indian rupee, has further depreciated. (In) Wednesday’s trade, it depreciated hugely and it continued on Thursday as well,” said Gaurav Sharma, head of research (equity, commodity, and currency), Globe Capital Market. 

“Wednesday’s 25-basis point (bp) rate hike and the stance adopted by the Reserve Bank of India (RBI) indicate that there could be further rate hikes. Although the market had already factored in a 25-bp rate hike, the possibility of further hikes, along with the RBI’s shift in stance from ‘neutral’ to ‘calibrated tightening’, is putting pressure on the Nifty. Apart from that, the inflation forecast was raised to 5.2 per cent on Wednesday, while the policy rate now stands at 5.5 per cent. That leaves us with only about 0.3 per cent in real returns on a simple nominal-minus-inflation basis,” said Raj Gaikar, research analyst at Samco Securities. 

All 23 sectoral indices closed deep in the red, led by sharp declines in heavyweight stocks across metal, realty, auto, and media. Nifty Metal was the worst hit, dropping 3.55 per cent to close at 11,870.05, closely followed by Nifty Realty (-3.16 per cent), Nifty Media (-2.79 per cent), and Nifty Auto (-2.49 per cent). 

“Friday is the last trading session of the week. We could see further volatility or maybe more selloff in the market, especially in the final one to two hours of trading. Generally, traders prefer to square their bets in this volatile scenario, and they do not wish to carry their positions overnight. 21,800-22,000 is the level that we are looking at (for Nifty 50),” Sharma added. 

Tata Consultancy Services (TCS) showed some early revival but closed nearly flat at ₹2,076, down 0.21 per cent, before the company released its quarterly earnings update. TCS reported a 15 per cent year-on-year increase in net profit to ₹13,884 crore for the quarter ended September 30, while revenue rose 11 per cent to ₹73,188 crore. While the numbers were in line with analyst consensus, the stock could remain volatile. “Information technology (IT) sector will be on the radar in Friday’s trading session. We will see volatility in IT space on Friday,” said Sharma.