Indian stock markets plunged sharply after US President Donald Trump declared US-Iran talks over, triggering geopolitical fears and risk-off sentiment. Sensex tumbled over 1,600 points, or around 2%, to 76,555, while Nifty 50 plunged over 500 points, or more than 2%, to 23,887.45. This came after Trump signalled an end to the ongoing peace deal negotiations, stating at the NATO Summit in Ankara that "To me, I think it's over. I don't want to deal with them anymore. They're scum... They're led by sick people... I'll speak to our negotiators. They want to negotiate--they're good people... but they have to come back to me." The remarks triggered immediate selling pressure as investors rushed to cut exposure amid fears of renewed conflict in West Asia.
Eternal shares were the top gainers on Sensex, rising 3.47%, while Sun Pharma, Titan, Bharti Airtel, ICICI Bank, Asian Paints, Trent, Larsen & Toubro, HDFC Bank, Power Grid, UltraTech Cement and BEL also posted strong gains. However, IT stocks including Infosys fell over 2%, while HCL Tech, TCS and Tech Mahindra also remained under pressure, weighing on the IT pack. As reported by The Economic Times, sectorally, Nifty Consumer Durables emerged as the top performer, gaining 1.91%, followed by Nifty Realty up 1.34%. The recovery was broad-based across the market, with Nifty Smallcap 100 gaining 1.03%, Nifty Midcap 50 rising 0.97%, and Nifty 500 advancing 0.68%. The only notable laggard remained the Nifty IT index, which slipped 1.46% as investors continued to book profits ahead of Tata Consultancy Services' June-quarter earnings.
Brent crude rose nearly 4% to USD 76.71 per barrel after Trump's declaration that the peace process is over, with the US President acknowledging renewed strikes on Iran which took place on Tuesday night. According to The Economic Times, Trump told reporters that "We attacked, very powerfully last night, the very dangerous people from Iran... There's something wrong with them. We say, 'Go and do your funeral stuff,' and instead of that, they start shooting rockets at ships yesterday. So we hit them very hard last night." Market experts note that crude prices near $76.71 are uncomfortable but still manageable for India. More importantly, futures markets do not indicate that oil prices are likely to spiral beyond $100, unless the Strait of Hormuz faces another disruption. The spike in Brent crude to around $80 raised concerns in the market, though analysts emphasize that Brent at $80 is not a problem and won't create a BoP crisis.
India VIX surged over 28% reflecting heightened market volatility as investors rushed to cut exposure amid the geopolitical uncertainty. According to market expert Ajay Bagga, "The sudden collapse of the Memorandum of Understanding (MOU) between the US and Iran has triggered a sharp wave of risk-off sentiment across global financial markets, hitting Indian equities particularly hard." He noted that "President Trump's declaration that the peace process is 'over' injects severe geopolitical uncertainty right back into the critical Strait of Hormuz transit corridor." Bagga emphasized that "Investors are aggressively shedding risk, leading to the sharp sell-off on the D-Street today as the global market landscape rapidly recalibrates for a prolonged, volatile standoff in West Asia." With crude oil prices climbing and geopolitical risks back in focus, Bagga expects market volatility to remain elevated until there are clearer signs of de-escalation.
Foreign institutional investors continue to support Indian equities, with FIIs buying equity worth ₹3,954 crore in the cash market during the last four trading days. As reported by The Economic Times, they net purchased shares worth ₹1,962.80 crore on Wednesday amid the market crash. The rupee opened at 95.55 against the US dollar, almost unchanged from the previous close of 95.5550, providing additional support to investor sentiment. According to Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, the rupee is expected to trade in the 95.20–95.80 range in the near term.
