Indian equities opened the week on a weak note, with benchmark indices witnessing sharp losses on Monday, April 13. The BSE Sensex fell nearly 1,700 points, or over 2 per cent, to an intraday low of 75,868. The Nifty 50 also dropped around 500 points, or 2 per cent, to 23,556, Mint reported.
The selloff was broad-based, dragging midcap and smallcap indices down by more than 2 per cent each. Within minutes of opening, investors saw wealth erosion of nearly Rs 8 lakh crore, as total market capitalisation of BSE-listed firms declined to Rs 443 lakh crore from Rs 451 lakh crore in the previous session.
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US-Iran talks fail to yield positive outcome
A key trigger behind the fall was the lack of progress in US-Iran talks over the weekend. Hopes of a resolution to the conflict faded after negotiations ended without an agreement, raising concerns about prolonged instability in West Asia.
Adding to the uncertainty, the proposed US blockade of the Strait of Hormuz has heightened fears of disruptions in global energy supply, a critical factor for market stability.
Oil prices surge above $100
Crude oil prices jumped sharply following the geopolitical developments. Brent crude traded near $103 per barrel, while WTI crude crossed $105 per barrel, both rising over 8 per cent.
Elevated oil prices are seen as a risk for India's economy, particularly if they persist. "With the failure of US-Iran peace talks and Trump’s declaration of US naval blockade in the Strait of Hormuz, uncertainty and along with it crude price have spiked. Brent at $103 is emerging as yet another threat to the economy and markets," VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted per Mint.
Global markets and tariff concerns add pressure
Weak global cues also contributed to the decline. Asian markets mirrored the cautious sentiment, with Japan's Nikkei and Korea's Kospi falling over 1 per cent, while China's Shanghai Composite slipped during the session.
Investor nerves were further rattled by fresh tariff rhetoric from Donald Trump. Reports suggest Trump warned of a potential 50 per cent tariff on China if it supplies weapons to Iran. "I doubt they would do that... but if we catch them doing that, they get a 50% tariff, which is a staggering amount," Trump said, as reported by Mint.
Rupee weakness adds to concerns
The Indian currency also came under pressure. The rupee weakened by 70 paise to 93.43 against the US dollar, compared to its previous close of 92.73.
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A stronger dollar combined with rising oil prices may accelerate foreign capital outflows, adding another layer of pressure on the markets.
"How the US naval blockade, which in effect will be a US blockade of Iran’s blockade, will play out remains to be seen. There can be dramatic developments on the geopolitical front, and consequently on markets as well. The ideal strategy in this ultra-uncertain situation is to wait and watch," Vijayakumar added.
Dow Futures fall
US stock futures fell early Monday after President Donald Trump announced a blockade of the Strait of Hormuz. Peace talks between the US and Iran over the weekend ended without a deal.
Dow Jones Industrial Average futures dropped by 517 points, or 1.1 per cent. S&P 500 futures lost 1.1 per cent, and Nasdaq 100 futures shed 1.2 per cent, reported CNBC.
