Stocks fall as crude tops $110, rupee weakens and investors turn cautious

Indian equity markets fell steeply on Monday, with benchmark indices sliding in early trade amid mounting global uncertainties linked to the ongoing West Asia conflict and a surge in crude oil prices.

The BSE Sensex dropped 1,785.12 points, or 2.4 per cent, to 72,747.84 by mid-morning, while the Nifty 50 declined 567.15 points, or 2.45 per cent, to 22,547.35 — its lowest level in nearly a year. Market breadth remained firmly negative, with a sharp majority of stocks trading in the red.

Selling pressure was visible across sectors, with all major indices posting losses. Broader markets also underperformed, as mid-cap and small-cap stocks saw deeper declines, moneycontrol reported.

Among individual stocks, HDFC Bank fell around 2.5 per cent, extending losses from previous sessions following the resignation of its part-time chairman. State Bank of India dropped 3.6 per cent after receiving a substantial tax demand for the 2024 assessment year.

One of the key factors weighing on markets was the sharp rise in global crude prices. Brent crude hovered above 110 dollars per barrel, driven by fears of supply disruptions amid escalating geopolitical tensions. Elevated oil prices are a significant concern for India, as they tend to fuel inflation, widen the current account deficit and put pressure on the rupee.

Foreign portfolio investor (FPI) outflows further dampened sentiment. Overseas investors have remained net sellers throughout March, pulling out large sums from Indian equities as global risks intensify and returns appear comparatively less attractive.

Volatility also spiked, with the India VIX index rising sharply to its highest level in months, reflecting heightened uncertainty and risk aversion among investors.

The ongoing tensions involving the United States and Iran have added to market jitters, particularly due to concerns over the Strait of Hormuz — a critical route for global oil shipments. Analysts say the lack of clarity over the duration and outcome of the conflict continues to unsettle financial markets.

Global cues remained weak, with major Asian indices posting steep losses and US markets ending lower in the previous session. Futures trading also pointed to continued pressure on Wall Street.

Meanwhile, the Indian rupee weakened further, hitting a record low against the US dollar in early trade. Rising oil prices and sustained capital outflows have compounded pressure on the currency, while bond yields have also edged higher.

Market analysts expect volatility to persist in the near term. Some suggest the Nifty could test lower support levels before stabilising, while a sustained recovery would require a strong upward move supported by improved global conditions.

With PTI, IANS inputs