The Indian benchmark indices SENSEX and NIFTY50 declined sharply on Tuesday, extending losses for the fourth straight session amid rising crude oil prices and concerns over the ongoing US-Iran tensions. At 1:45 PM, the S&P BSE SENSEX crashed 1,096.01 points or 1.44% to 74,919.27, while NSE's NIFTY50 fell 316.25 points or 1.33% to 23,499.60. According to TradingView News, about 951 shares advanced, 2,786 shares declined, and 117 shares were unchanged, with all sectoral indices on the NSE trading in the red except metals, oil & gas and PSU banks. The broader Nifty Smallcap100 and Nifty Midcap100 indices declined 1.26% and 0.81% respectively, while Bank Nifty was down up to 1%. Domestic equity benchmarks opened in the red on Tuesday, mirroring cautious trends across broader Asian markets, with the BSE Sensex opening at 75,637.76 points, down 377.52 points or 0.50%, while the NSE Nifty 50 slipped 93.25 points or 0.39% to start the session at 23,722.60 points.
Upstream oil companies such as ONGC and Oil India Ltd were trading in positive territory on Tuesday, after the government reduced royalty rates on crude oil and natural gas production from multiple categories of fields, including deepwater and ultra-deepwater blocks, to boost domestic exploration and output. As reported by PTI, the revised royalty rates and methodologies were notified by the Ministry of Petroleum and Natural Gas on May 8 as part of broader reforms to create a more stable and investor-friendly framework for India's upstream oil and gas sector. The government has termed the rationalisation of royalty rates and methodologies for crude oil, natural gas, and casing head condensate as a major reform for India's upstream oil and gas sector. ONGC and Oil India climbed 6% and 6.6% respectively, with brokerage CLSA terming the government's royalty cuts on crude oil and gas production as a significant positive for the two companies. Nifty Oil & Gas advanced 0.61% in early trade, while Nifty Metal rose 0.58% to 13,001.35 points, with both sectors benefiting from the positive oil sector sentiment. According to CLSA, the changes imply a blended royalty reduction of around 3 percentage points for ONGC's crude production, with the effective royalty rate on onshore crude production reduced from 16.66% to 10%, while offshore royalty has been lowered from 9.09% to 8%. Royalty on natural gas has also been reduced to 8% from 10% earlier.
The NIFTY IT index tumbled 3.3%, with all its constituents, including TCS, Infosys, HCLTech and Wipro down between 2.5% and 4%, ahead of U.S. inflation data. This heavy selling in information technology shares further dragged the markets lower, as IT stocks hold significant weight in the Nifty 50 index, and sharp declines in the sector exert pressure on the broader market. According to Ponmudi R, CEO of Enrich Money, "The ongoing US-Iran conflict continues to weigh on global sentiment, keeping risk appetite subdued across financial markets and resulting in heightened headline-driven volatility across equities and commodities. Investors remain wary as uncertainty surrounding the duration and potential outcome of the conflict continues to cloud market confidence." In early trade, Nifty IT emerged as the top loser, falling 1.67% to 28,838.85 points, with Nifty Financial Services 25/50 and Nifty Private Bank indices also trading lower by 0.46% each. Nifty PSU Bank and Nifty Consumer Durables indices declined 0.38% and 0.18% respectively, while Nifty FMCG and Nifty Healthcare registered marginal losses.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, explained that "the prime minister's austerity appeal had impacted sectors expected to witness reduced consumption. Stocks of sectors like jewellery, travel and hotels bore the brunt of selling yesterday." He noted that "sectors which are not impacted by the austerity appeal will remain resilient. Pharmaceuticals is the segment which is not impacted at all since the sector has inelastic demand. Additionally, it gains from rupee depreciation. FMCG also will be least impacted." According to Bajaj Broking, Nifty was likely to open below the lower band of the last three weeks' range of 23,800-24,400, with holding above 23,800 on a closing basis signalling extension of the last three weeks' consolidation. The brokerage added that Bank Nifty was trading near the lower end of its three-week range of 54,000-56,500, with immediate resistance placed at Monday's gap-down area of 24,127-23,997.
JSW Energy tumbled 8% to hit their intraday low on the National Stock Exchange (NSE) on Tuesday, after the March quarter results failed to boost investor sentiment in the power generation firm's stock. According to NSE filings released post-market hours on Monday, JSW Energy's profits (attributable to owners of the company) dropped 9% to ₹371 crore in the fourth quarter of the financial year ended 2025-26, compared with ₹408 crore in the same period a year earlier. Meanwhile, shares of Aurionpro Solutions tanked over 10%, as it reported a decline in its EBITD margin in the quarter ended March 31, 2026, despite its consolidated net profit jumping 22.2% YoY to ₹61.51 crore in Q4 FY26. The company's revenue rose 5.7% to ₹345.57 crore during the quarter, but its EBITDA margin declined by 80.5 basis points YoY to 19.4%.
In the commodities market, Brent crude prices rose 0.69% to USD 104.93 per barrel, while crude oil traded at USD 98.88, up 0.82%. According to ANI, gold prices, meanwhile, slipped 0.20% to USD 4,726.27. The rising crude oil prices continue to impact market sentiment, with VK Vijayakumar noting that "it is important to understand that these sectors will bounce back smartly if crude falls sharply and the austerity package becomes irrelevant. Therefore, watch out for the West Asia geopolitical situation and crude prices." The ongoing fuel crisis has particularly affected state-run oil marketing companies, with India's state-run fuel retailers staring at first-quarter (Q1 FY27) losses large enough to wipe out profitability for the full fiscal year (FY26), as soaring crude prices and government-led freeze on pump prices squeeze marketing margins. CLSA highlighted the broader policy signal from the government, especially when crude oil prices are rising, and fiscal pressures remain elevated, noting that the royalty cut suggests the government is focused on encouraging upstream exploration and production rather than increasing taxes on producers.
