Indian equity markets experienced significant declines in early trading on Tuesday, with the BSE Sensex falling 525.44 points to 75,489.84 and the NSE Nifty dropping 164.5 points to 23,651.35. According to reports from The Hindu, the decline was primarily driven by rising crude oil prices and ongoing U.S.-Iran tensions that continue to dampen investor sentiment. From the 30-Sensex constituents, major laggards included Tata Consultancy Services, Infosys, Tech Mahindra, HCL Tech, Adani Ports, and Bajaj Finserv, while Bharti Airtel and NTPC emerged as the top performers.
West Texas Intermediate crude held above $98 per barrel on Tuesday, with Brent crude rising 0.3% as President Donald Trump rejected Iran's latest peace proposal. As reported by The Hindu, the elevated oil prices reflect broader geopolitical tensions that are affecting commodity markets globally. The sustained rise in crude oil prices continues to create headwinds for Indian markets, particularly given the country's significant energy import dependency. Crude surged nearly 3% amid fears that prolonged tensions could disrupt shipping through the Strait of Hormuz, a critical global supply route. Higher oil prices contributed to rising Treasury yields, with the 10-year Treasury yield climbing six basis points to 4.41% as investors priced out Fed rate cuts this year.
U.S. President Donald Trump called Iran's response to his peace proposal a "piece of garbage" and stated that he didn't even finish reading it, according to reports from The Hindu. Trump made these comments on Monday, a day after he rejected Tehran's proposal to end the months-long war as "totally unacceptable." The fragile ceasefire in the Middle East appeared to waver, with Trump telling Fox News earlier on Monday that he's looking at reviving a plan to escort ships through the Strait of Hormuz. "An agreement remains elusive and risks remain elevated," said Mark Haefele at UBS Chief Investment Office, noting that "both sides remain under pressure to conclude a deal."
The Indian rupee dropped to its lowest level in a month, closing at a record low as oil prices surged over the US-Iran stalemate. As reported by The Hindu, India's benchmark equity index fell 1.5% and government bonds slid, with the yield on the 10-year benchmark jumping 6 basis points. Over the weekend, Indian Prime Minister Narendra Modi urged a series of measures, including fuel conservation, fewer imports, as well as reduced travel, as a surge in energy prices takes a toll on the country's foreign exchange buffers. Higher oil prices are a major risk for net energy importer India and threaten to widen the country's current account deficit, slow growth and stoke inflation.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹8,437.56 crore on Monday (May 11, 2026), as reported by The Hindu. This significant outflow continues to pressure Indian markets, with unabated foreign fund outflows adding to the downward pressure on equity indices. The sustained FII selling reflects broader risk-off sentiment in global markets amid geopolitical uncertainties. "Structurally weak external funding conditions mean even a small widening of the current account deficit will continue to put pressure on the INR and FX reserves," analysts at ANZ noted in a report.
