Indian Equities Decline as Crude Oil Prices and Geopolitical Tensions Weigh on Investor Sentiment

Indian equity benchmark indices ended lower on Monday, with the BSE Sensex falling 442.93 points, or 0.57 per cent, to close at 77,708.52, while the Nifty 50 declined 95.80 points, or 0.39 per cent, to settle at 24,238.50, as investors remained cautious amid rising crude oil prices and escalating geopolitical tensions in West Asia.

According to market experts, the collapse of the June ceasefire between the US and Iran has pushed crude oil prices higher, raising concerns over inflation and the global economic outlook.

Vinod Nair, Head of Research, Geojit Investments Limited, said, "The collapse of the June ceasefire between the US and Iran has pushed crude prices to touch USD 90. Markets have started the week on a cautious note, reflecting rising pressure on the global economy. These tensions are expected to persist in the near term as US military actions expand and global travel advisories for US citizens remain in place. This environment is likely to influence central bank policies in H2CY26, with most central banks maintaining a hawkish stance."

He noted that the probability of future rate hikes is increasing as inflation and global bond yields continue to trend higher. "At the same time, the initial set of Q1 earnings has been encouraging, driven largely by PSU banks, oil & gas and metals. While mid-cap and small-cap stocks outperformed their large-cap peers, supported by resilient earnings growth expectations and improving business momentum, further reinforcing opportunities for selective stock picking in the broader market, despite prevailing geopolitical headwinds."

Sectoral indices on the NSE ended on a mixed note. Nifty Auto declined 0.26 per cent, Nifty IT fell 0.22 per cent, and Nifty Private Bank dropped 2.27 per cent.

Nifty FMCG gained 0.65 per cent, Nifty Media rose 1.09 per cent, Nifty Metal advanced 0.86 per cent, Nifty Pharma added 1.40 per cent, while Nifty PSU Bank emerged as the top performer with a gain of 2.78 per cent.

At the time of filing this report, Brent crude was trading at USD 88.19 per barrel, while the Indian rupee was trading at Rs 96.45 per US dollar.

Riyank Arora, Associate Vice President - HNI & Derivatives, Hedged.in said, "Today's decline appears to be a healthy bout of profit booking following the recent rally rather than a change in the broader trend. As long as benchmark indices hold above their immediate support levels, the overall outlook remains positive. Traders may continue to adopt a buy-on-dips approach while maintaining disciplined risk management and keeping a close watch on key support zones."

Other Asian markets also ended lower. Japan's Nikkei 225 index declined more than 4 per cent to the 64,141 level, South Korea's KOSPI closed down 4.67 per cent at the 6,515 level, Singapore's Straits Times fell 0.19 per cent to the 5,498 level, while Taiwan's weighted index lost 0.52 per cent to the 42,449 level.