The Indian stock markets snapped their two-day winning streak on Tuesday, May 26, as escalating geopolitical tensions in the Middle East sparked a wave of profit booking. The 30-share BSE Sensex declined 479.26 points, or 0.63%, to settle at 76,009.70, after opening lower by around 265 points at 76,224.14. During the day, the index tanked 579.28 points, or 0.75%, to 75,909.68, before recovering to close near the day's low. The 50-share NSE Nifty dropped 118 points, or 0.49%, to end at 23,913.70, compared with 24,031.70 at the previous stock market close. However, markets showed early resilience by 9:41 AM, with the NIFTY clawing back into positive territory at 24,057, though the underlying pressures remain real.
Investors in Asian markets were in a profit-booking stage after the massive rally on Monday over the shift in geopolitical tensions and renewed hopes of a peace deal between the United States and Iran. As reported by market sources, latest media reports of fresh 'self defence' attacks conducted by the United States on the Iranian military sites and boats have raised concerns in the market of any further escalation of the conflict amid a fragile ceasefire deal. The market is closely monitoring negotiation developments between the two countries, with expectations of a peace deal by the end of this week, marking the 13th week of the war since February 28. The Strait of Hormuz situation is particularly concerning as it represents a narrow waterway where around 20% of the world's oil supply passes through daily, creating direct implications for India's fuel costs and airline operations.
Oil-sensitive sectors like aviation and insurance bore the most pressure in early trade, with specific stocks showing notable declines. IndiGo (InterGlobe Aviation) declined approximately 0.76%+, while SBI Life Insurance experienced a notable decline as reported by Upstox live market data. The Bharti Airtel also fell around 0.80% in the telecom sector. These declines are attributed to fresh anxiety over potential attacks in the Strait of Hormuz, mixed Asian market signals, and broad-based investor caution that has been building for weeks. For aviation stocks, the concern stems from India's crude basket peaking at $113.57 per barrel, with jet fuel (ATF) being their single largest operating cost, while insurance stocks face pressure as life insurers like SBI Life invest significant portions of premium income into equities and bonds, making them vulnerable to market volatility. However, Tech Mahindra, Eternal, Maruti and Adani Ports were among the winners in contrast to the broader market decline.
Market experts view the pullback as a healthy pause rather than a trend reversal, pointing to vital technical floors that could determine the market's next major move. Hitesh Tailor of Choice Broking noted that the Sensex faced resistance near the 76,600–76,700 zone and witnessed profit booking from higher levels, with immediate support placed around 75,400–75,700 and resistance seen near 76,700–77,000. Vipin Dixena from SEBI-registered analysis suggests the broader short-term structure remains constructive despite the correction, with the index slipping back toward the crucial 75,900–76,000 support zone near the 50 EMA. The rupee depreciated 47 paise to close at 95.73 against the US dollar on Tuesday, while Brent crude, the global oil benchmark, climbed 2.93% to USD 98.96 per barrel. Foreign Institutional Investors (FIIs) bought equities worth ₹821.75 crore on Monday, snapping their selling streak amid the wider market momentum.
Sector-wise performance showed mixed results on Tuesday, May 26. Capital Goods, Metal, Utilities, Power, Commodities, Telecommunication, and Focused IT witnessed selective buying interest and managed to outperform during the session, while Consumer Durables, Top 10 Banks, Financial Services, Hospitals, Realty, PSU Banks, and Private Banks witnessed weakness and profit booking. Utilities jumped 1.15%, Metal gained 1.02%, Power rose 0.86%, and Capital Goods advanced 0.52%, according to Choice Broking analysis. The BSE MidCap Select index went up by 0.27%, and the SmallCap Select index edged higher by 0.26%. Banking indices traded under pressure, while FMCG, Auto, and IT sectors remained relatively range-bound with limited directional movement. The BSE Banking index dropped 0.31%, Consumer Durables fell 0.86%, and Top 10 Banks declined 0.61%.
