Indian equity markets traded cautiously on Monday, with benchmark indices falling 1 per cent each in early trade after the US and Iran failed to reach an agreement on a peace proposal related to the West Asia conflict. Sensex declined by 1.22 per cent, dropping 943 points to an intraday low of 76,384, while Nifty fell 1.15 per cent, losing 280 points to 23,897.
All sectoral indices traded in the red, with Nifty Consumer Durables, Nifty Auto, Nifty PSU Bank, Nifty Private Bank, Nifty Oil & Gas, and Nifty Chemicals falling up to nearly 3 per cent. Among Nifty stocks, top laggards included Titan, IndiGo, M&M, Shriram Finance, Eternal, Maruti Suzuki, Bajaj Auto, Bajaj Finserv, Bharti Airtel, HDFC Life, Eicher Motors, and Dr Reddy’s Laboratories.
India VIX, the market volatility gauge, rose nearly 2 per cent to 10.7. Equities are expected to face pressure from two major headwinds on Monday. President Trump’s rejection of Iran’s response has dimmed hopes of a resolution to the West Asia crisis, leading to a surge in Brent crude prices to $105, potentially worsening the current account deficit.
Prime Minister Narendra Modi’s call for austerity to curb fuel, gold, chemical fertilizers, and edible oil consumption, along with discouraging avoidable foreign travel, aims to address the rising pressure on the current account deficit due to elevated crude prices. This may have slightly negative implications for economic growth in FY27, with industries linked to petroleum, fertilizers, gold, aviation, and hotels likely to face sentiment-driven pressure.
US President Donald Trump expressed dissatisfaction with Iran’s response, calling it “TOTALLY UNACCEPTABLE!” This remark dashed hopes of a quick resolution to the 10-week-long US-Iran conflict, impacting oil transit through the Strait of Hormuz. In commodities, Brent crude rose to $105.76 per barrel, and US West Texas Intermediate (WTI) climbed to $100.31 per barrel.
Asian markets showed mixed trends, with Japan’s Nikkei and Hong Kong’s Hang Seng down by 0.3 per cent each, while South Korea’s KOSPI rose over 4 per cent.
