Indian Stock Markets Plunge Amid Geopolitical Tensions and Rising Crude Prices

Stock market crash today: BSE Sensex and Nifty50 plunged in trade on Tuesday continuing their downward streak as global crude oil prices continued to climb. Investors reacted nervously to the rupee hitting a fresh record low, persistently high crude oil prices and a range of global uncertainties. Both indices closed over 1.5% down. The decline erased over Rs 10.16 lakh crore in investor wealth, dragging the total market capitalisation of BSE-listed companies down to nearly Rs 456 lakh crore.

Vikram Kasat, Head Advisory at PL Capital, said investor sentiment remained cautious due to continued foreign institutional investor selling, a weakening rupee and uncertainty surrounding global macroeconomic conditions. However, he noted that strong domestic liquidity and improving market breadth were helping cushion the downside to some extent. He added that market direction in the coming sessions would largely depend on the movement in crude oil prices, global risk appetite and institutional flows, while earnings-driven stock-specific action is expected to continue.

One of the key triggers behind the market decline was renewed uncertainty surrounding the US-Iran conflict. US President Donald Trump said the ceasefire with Iran was “on life support” after Tehran rejected Washington’s latest proposal aimed at ending the conflict. Trump described Iran’s demands as “garbage.” Iran has reportedly sought a halt to hostilities across all fronts, including Lebanon, where Israel is engaged in conflict with Iran-backed Hezbollah militants. Tehran has also demanded recognition of its sovereignty over the Strait of Hormuz, compensation for war-related damages and removal of the US naval blockade, among other conditions. Trump said Iran’s response had cast serious doubt over the future of the ceasefire that came into effect on April 7.

Crude prices stayed elevated as hopes of a quick resolution to the Middle East conflict weakened, raising fears that the closure of the Strait of Hormuz could continue for longer. The 33-kilometre-wide passage, linking the Persian Gulf to the Gulf of Oman, is a critical route that carries more than one-fifth of the world’s daily oil and gas supplies. Brent crude advanced about 1% to trade above $105 per barrel on Tuesday morning, while US benchmark WTI crude also climbed nearly 1% to around $99 per barrel.

The Indian rupee slipped to an all-time low on Tuesday as concerns over the fragile ceasefire and rising crude prices intensified worries about the impact on India’s economy, which relies heavily on imported energy. The domestic currency weakened to 95.55 against the US dollar, down 0.2% from its previous close, surpassing the earlier record low of 95.4325 touched last week.

US Treasury yields edged up following the latest geopolitical developments. The benchmark 10-year Treasury yield climbed to 4.423%, while the 30-year bond yield rose to 4.994%. Meanwhile, the yield on the 2-year Treasury note, which is closely tied to expectations around Federal Reserve interest-rate moves, increased to 3.962%. Rising bond yields generally make fixed-income assets more appealing to investors, often pulling money away from equities and adding pressure on stock markets.

Foreign institutional investors remained net sellers in the Indian equity market, offloading shares worth Rs 8,438 crore on Monday, according to NSE data. The latest outflow marked the fifth straight trading session of selling by overseas investors.