Sensex drops over 800 points, Nifty slips 1% as Iran conflict weighs on markets

The Indian stock markets had a weak start on Tuesday amid uncertainty regarding the continuing Iran dispute and high crude oil prices. Major indexes traded lower in the opening hours of trade, contrary to their optimistic performance witnessed during the last trading session.

The BSE Sensex index tumbled up to 824.44 points or 1.11%to a low of 73,282.41 points. Similarly, the Nifty 50 index was trading 1.08% or 248.95 points lower at 22,719.30. All major sectors except two were trading negatively, suggesting selling in most sectors.

Broader markets also reflected weakness. Mid-cap stocks fell around 1%, while small-cap indices slipped about 0.5%, indicating a cautious sentiment across segments.

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Geopolitical concerns drive volatility

Investor sentiment stayed weak amid growing conflicts between the US and Iran. President Donald Trump renewed threats to strike Iranian facilities if no agreement is made by the specified deadline. Meanwhile, Iran sought a permanent solution to the issue, as opposed to a mere ceasefire.

A previous sense of hope regarding a framework to address the problem buoyed the market, pushing the Sensex and Nifty up by roughly 1.1% on Monday.

Crude prices and currency movement

Crude oil prices continued to move higher, trading around $111 per barrel. The rise in crude oil prices continues to pose challenges for India because of the effect on imports, inflation, and profit margins of businesses.

The Indian currency witnessed some strength, appreciating 8 paise against the US dollar to 92.98.

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“Markets are likely to remain highly sensitive to developments in the Iran war, movements in crude oil prices and trends in foreign flows,” Hindustan Times quoted Siddhartha Khemka, head of research of wealth management at Motilal Oswal Financial Services, as saying. “As Trump's deadline to Iran nears end, near-term uncertainty is likely to be elevated in the session”, he further added.

Following the outbreak of tensions in Iran since February 28, the Sensex and Nifty indices have seen a decline of around 9%, amid consistent pressure caused by uncertainties prevailing abroad.

There is also significant interest among investors regarding the forthcoming RBI monetary policy announcement that will likely be crucial for future market performance.

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