Crude prices rise, markets fall over 1.5% amid West Asia conflict

Indian equity markets fell sharply as Brent crude surged above $100 a barrel amid escalating Middle East tensions and heavy foreign investor outflows

Domestic stocks tumbled on Monday as rising tensions in West Asia kept the prices of crude oil firmly above $100 a barrel while Prime Minister Narendra Modi’s call for fuel conservation and lower imports added to concerns over the economy’s ability to weather a prolonged energy shock.

 

The benchmark Nifty 50 fell 1.5 per cent, or 360 points, to close at 23,816, while the BSE Sensex dropped 1.7 per cent, or 1,313 points, to end at 76,015.

 

The decline marked the indices’ steepest single-day fall since March 30 and wiped out ₹6.2 trillion in investor wealth.

 

The rupee also came under sharp pressure, ending at a record closing low of 95.31 against the dollar after declining 0.9 per cent — its biggest single-day fall since March 27.

 

 

Investor sentiment deteriorated after Brent crude surged nearly 3 per cent to around $104 a barrel.

 

The spike followed comments by United States President Donald Trump, who termed Iran’s response to Washington’s proposal for peace talks as “unacceptable”.

 

Israeli Prime Minister Benjamin Netanyahu also said the conflict with Iran was “not over”. 

 

Analysts said the market was reacting to fears of persistently high oil prices and their impact on India’s inflation, current account deficit, and fiscal position.

 

Stocks in the travel and jewellery sectors were among the worst-hit after Modi urged restraint in fuel consumption, imports and gold purchases to ease pressure on foreign-exchange reserves, strained by high energy prices.

 

Shares of InterGlobe Aviation (IndiGo) and Titan Company emerged as the top laggards on the Sensex and Nifty.

 

Among index heavyweights, Reliance Industries fell 3.3 per cent while HDFC Bank declined 2.1 per cent.

 

Defensive sectors offered some support, with Sun Pharmaceutical Industries rising 1.4 per cent and Hindustan Unilever gaining 0.9 per cent.

 

The broader markets were relatively resilient. The Nifty Smallcap 100 and Nifty Midcap 100 indices declined a little over 1 per cent each. The India VIX, a measure of market volatility, rose 10 per cent to 18.6.

 

On Monday, foreign portfolio investors (FPIs) pulled out ₹8,438 crore from domestic equities, the most since April 24.

 

Domestic institutional investors (DIIs) injected ₹5,940 crore. So far this year, FPIs have pulled out over ₹2.1 trillion.

 

“In the near term, the markets are expected to respond primarily to external cues — most notably swings in prices of crude oil, evolving geopolitical developments, and shifts in global capital flows,” Axis Mutual Fund said in a note.

 

The fund house added that sectors such as aviation, logistics and transportation faced immediate cost pressures from elevated fuel prices, while consumer-facing companies could be hit through higher inflation.

 

Puneet Singhania, director at Master Capital Services, said India was more vulnerable to the oil shock than some other Asian markets that benefited from the artificial intelligence and semiconductor boom.

 

“More than 85 per cent of the crude oil India consumes is imported and with Brent above $100, the second-order effects on inflation and the current account are unfavourable,” he said.

 

“Rupee depreciation also remains a key overhang in attracting global investors as it effectively erodes gains even when underlying equities perform.”

 

Market breadth remained weak, with 3,000 stocks declining against 1,358 advancing on the BSE.

 

Analysts said the trajectory of prices of crude oil and developments around Trump’s proposed visit to China later this week would be key triggers for the market in the near term.