Sensex falls 500 points, Nifty slips below 24,100 amid US-Iran tensions

Indian equity markets extended their decline on Tuesday, with the Sensex falling more than 500 points during the session and the Nifty slipping below 24,100 as escalating tensions between the US and Iran, higher crude oil prices and continued foreign investor selling dampened sentiment.

The benchmark indices gave up their early gains as geopolitical uncertainty triggered renewed risk aversion. The Nifty later moved close to the 23,900 level, while the Sensex pared some of its losses from the day's low.

A sharp increase in crude oil prices emerged as one of the main factors weighing on the market, moneycontrol reported. Brent crude climbed above $100 a barrel following reports of renewed exchanges of fire between the US and Iran in the Middle East.

The rise in oil prices renewed concerns over imported inflation and pressure on India's current account deficit, given the country's heavy dependence on crude imports. The development also weighed on sectors sensitive to fuel costs and currency movements.

Persistent selling by foreign institutional investors added to market volatility. FIIs had sold Indian equities worth Rs 340.89 crore in the previous session, extending a period of cautious positioning in domestic stocks.

Weakness across Asian markets further affected sentiment. Hong Kong's Hang Seng traded lower, while muted US stock futures offered little support to domestic equities.

The rupee also remained under pressure against the US dollar as geopolitical risks and uncertainty surrounding US trade policy kept investors cautious.

Concerns over a proposal by the US Trade Representative to impose additional duties on several countries, including India, over alleged forced-labour-related import rules also weighed on export-oriented companies.

Market volatility rose sharply, with the India VIX reflecting increased uncertainty and risk reduction by traders. Analysts said the combination of elevated crude prices, overseas fund outflows and geopolitical tensions could expose the indices to further declines if key support levels are breached.

Selling was broad-based across sectors, with automobile, realty and oil and gas stocks among the major laggards. However, upstream oil producers such as ONGC and Oil India gained as higher crude prices improved their earnings outlook.

Information technology shares also came under pressure amid concerns over corporate earnings and the outlook for global technology spending.

Investors are now closely tracking developments in the Middle East, movements in crude oil prices, US trade policy and domestic quarterly earnings. Analysts expect volatility to remain elevated if geopolitical tensions intensify or oil prices stay above $100 a barrel.

With agency inputs