Sensex, Nifty plunge as Middle East tensions spike oil prices

Indian equity markets witnessed a sharp sell-off on Monday, with benchmark indices Sensex and Nifty crashing in early trade amid escalating tensions in the Middle East and a surge in crude oil prices.

The 30-share BSE Sensex fell 2,743.46 points (3.37%) to 78,543.73 , while the 50-share NSE Nifty dropped 533.55 points (2.11%) to 24,645.10 in early trading. Among Sensex stocks, InterGlobe Aviation, Larsen & Toubro, Eicher, Adani Ports, Asian Paints, UltraTech Cement, and Reliance Industries were major laggards, while Bharat Electronics emerged as the only gainer.

Global crude prices surged sharply after the death of Iran's Supreme Leader Ayatollah Ali Khamenei in a coordinated US-Israeli airstrike on Tehran over the weekend. Iranian state media confirmed the killing on Sunday, and Iran retaliated by firing missiles at Israel and other Arab countries in the region. Brent crude, the global benchmark, jumped 5.38% to USD 76.79 per barrel , stoking fears of higher energy costs worldwide.

Asian markets reflected the nervousness, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng trading lower, while Shanghai’s SSE Composite managed marginal gains. Meanwhile, US markets had closed lower on Friday.

Experts warned that the geopolitical uncertainty could weigh heavily on Indian markets in the near term. "The major risk from the market perspective is the energy shock arising from the crude surge," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited. Ponmudi R, CEO of Enrich Money, added that "prolonged regional instability could disrupt trade routes, strain supply chains, and tighten global financial conditions if inflation expectations rise further."

Foreign Institutional Investors (FIIs) pulled out equities worth Rs 7,536.36 crore on Friday, while Domestic Institutional Investors (DIIs) bought shares worth Rs 12,292.81 crore , reflecting cautious optimism amid market volatility. On Friday, the Sensex had already declined 961.42 points (1.17%) to settle at 81,287.19 , and the Nifty ended 317.90 points (1.25%) lower at 25,178.65 .