Markets tumble for second day as crude surge sparks inflation concerns

Over Rs 17 trillion in investor wealth was wiped out in two days amid fears over inflation, fiscal deficit pressures and continued foreign outflows

Domestic equity markets extended their sharp selloff on Tuesday, dragged down by surging crude oil prices and mounting concerns over the domestic economic outlook amid escalating geopolitical tensions in the Middle East.

 

The benchmark Nifty 50 index fell 1.83 per cent to close at 23,380, while the Sensex declined 1,456 points, or 1.92 per cent, to end at 74,559. The two indices closed at their lowest levels since early April.

 

Tuesday’s decline wiped out nearly ₹11.3 trillion in investor wealth, taking the cumulative market capitalisation loss over the past two sessions to ₹17.44 trillion.

 

The Sensex has now fallen 3.6 per cent over the past two trading sessions — its steepest two-day decline since March 30.

 

 

The latest leg of the selloff came as hopes of a quick resolution to the US-Iran conflict faded further. A day earlier, markets had already dropped more than 1.5 per cent after US President Donald Trump termed Iran’s response to Washington’s proposal for peace talks as “unacceptable”. Tehran subsequently rejected a US proposal to end the conflict and maintained a list of demands Trump described as “garbage”.

 

Brent crude prices hovered around $107 per barrel, raising concerns for India, which imports more than 90 per cent of its crude oil requirements and nearly half of its natural gas demand.

 

Market participants said rising energy prices, weakening currency trends, and concerns over the economic impact of the Centre’s recent belt-tightening measures hurt investor sentiment. 

 

“The market remained under pressure due to rising geopolitical tensions between the US and Iran, which pushed global crude oil prices above the $100–105 per barrel range, increasing concerns over inflation and India’s higher import bill,” said Gaurav Garg, research analyst at Lemonn Markets Desk.

 

“The surge in oil prices, driven by supply disruption fears, weighed on investor sentiment, especially for an oil import-dependent economy like India,” Garg said. He added that the rupee weakening towards the 95-per-dollar mark, continued foreign portfolio investor (FPI) outflows, and elevated volatility further contributed to the “risk-off sentiment” in the market.

 

Foreign portfolio investors sold shares worth ₹1,959 crore on Tuesday, while domestic institutional investors bought nearly ₹8,000 crore worth of equities. Net FPI outflows in 2026 have now crossed ₹2.1 trillion.

 

Selling pressure remained broad-based, with all 16 major sectoral indices ending in the red. Information technology and realty stocks led the losses.

 

The broader market also witnessed deeper cuts, with the Nifty Smallcap 100 index dropping 3.2 per cent and the Nifty Midcap 100 index declining 2.5 per cent.

 

Hariprasad K, founder of Livelong Wealth, said the ongoing decline reflected a deeper erosion in investor confidence rather than a routine correction.

 

“Unlike a routine profit-booking phase, the current decline appears to be driven by a broader ‘confidence shock’ in the market,” he said.

 

“Investors are increasingly interpreting recent policy messaging and austerity-oriented commentary as an indication that policymakers may be preparing for a tougher macroeconomic environment ahead,” Hariprasad added.

 

He said concerns over slowing discretionary consumption, rising imported inflation, and weaker earnings visibility had intensified the selloff, while high crude oil prices, a weakening rupee, and sustained FPI selling had created a “macro triple hit” for Indian equities.

 

Among individual stocks, upstream oil producers bucked the weak trend. Shares of Oil and Natural Gas Corporation rose 4.8 per cent, while Oil India gained 7.7 per cent after brokerage CLSA said proposed royalty cuts on crude and gas production would benefit the companies.

 

(With inputs from Reuters)