Sensex Plunges 750 Points, Nifty Slips Below 23,850 As Iran-US War Sends Oil Prices Higher

Stock Market Today, September 2: Indian equity benchmarks opened sharply lower on Wednesday as renewed US-Iran hostilities sent crude oil prices higher and weighed on investor sentiment.

The BSE Sensex dropped nearly 750 points, or 0.98%, to 76,193.82 in early trade, while the Nifty50 declined 235 points, or 0.98%, to 23,820.75. The broader market also remained under pressure, with the Nifty Midcap 100 falling 1.22% and the Nifty Smallcap 100 slipping 1%.

The India VIX, a measure of expected market volatility, rose 2.84% to 11.82, signalling increased caution among investors.

IT, Realty Stocks Among Worst Hit

Selling was widespread across sectors at the opening bell. The Nifty IT index led the declines, falling 2.47%, followed by Realty at 1.97% and Auto at 1.83%. Cement, Financial Services ex-Bank and Mid-Smallcap IT & Telecom were also among the major laggards. Pharma and Healthcare stocks were relatively steady, declining 0.10% and 0.17%, respectively.

The sell-off came as crude oil prices jumped following a fresh escalation in the US-Iran conflict. Brent crude surged nearly 5% overnight to approach $96 a barrel, raising concerns about inflation and the impact of higher energy costs on India’s import bill.

V K Vijayakumar, chief investment strategist at Geojit Investments, said the market was caught between strong domestic fundamentals and growing external risks.

He cited robust first-quarter GDP growth, healthy GST collections, credit expansion, automobile sales and improving earnings prospects as key domestic tailwinds. However, he said the renewed US-Iran conflict and the sharp rise in Brent crude were negative for market sentiment.

Vijayakumar added that India’s relatively low current account deficit and strong foreign exchange reserves provide some protection against higher oil prices. He warned, however, that rising US bond yields could pose a greater risk to global equities.

According to him, a rise in the US 10-year Treasury yield towards 5% could trigger a major correction in global stock markets.

Crude Oil Emerges As Key Market Risk

The latest market weakness followed US airstrikes on targets in Iran overnight, prompting Tehran to retaliate. The renewed military confrontation represents one of the sharpest escalations between the two countries in weeks.

Iran’s Islamic Revolutionary Guard Corps warned that the US strikes could further restrict traffic through the Strait of Hormuz, a vital shipping route for global oil supplies.

The possibility of prolonged disruption around the waterway has heightened concerns over energy supplies and pushed crude prices higher.

Ponmudi R, CEO of Enrich Money, said Indian markets could remain under pressure as rising crude prices and global bond yields add to geopolitical and macroeconomic uncertainty.

While India’s domestic growth outlook remains supportive, he said external risks are likely to dominate market sentiment in the near term.

Crude has emerged as the biggest immediate concern for domestic equities. WTI crude has gained more than 8% over the past two sessions following the renewed US-Iran tensions.

Brent crude futures rose 75 cents, or 0.8%, to $95.40 a barrel by 0345 GMT, while US West Texas Intermediate futures gained 44 cents, or 0.5%, to $90.66. Both contracts jumped more than $4 on Tuesday, recording their strongest daily gains since late July.

Investors will now closely track crude prices, developments around the Strait of Hormuz and US bond yields for cues on the direction of Indian markets.