Sensex falls 374 points as oil surge and geopolitical tensions stoke inflation worries

Stock markets declined for the third consecutive day, with the benchmark Sensex closing lower by nearly 374 points following a bearish trend in global equities and higher oil prices due to escalating conflict in West Asia.

The 30-share BSE Sensex dropped 373.93 points, or 0.49 per cent, to settle at 76,570.35. During the day, it tumbled 808.56 points, or 1.05 per cent, to 76,135.72. The 50-share NSE Nifty slumped 141.35 points, or 0.59 per cent, to end at 23,914.45.

Energy Crisis Triggers Risk-Off Sentiment

Brent crude, the global oil benchmark, climbed 0.40 per cent to $95.13 per barrel. The surge followed renewed US-Iran hostilities, with Tuesday marking one of the sharpest escalations in weeks as the U.S. carried out a series of airstrikes against Iran, drawing swift retaliation from Tehran. The U.S. and Iran exchanged fire Tuesday as they continued to battle for control of the Strait of Hormuz.

WTI crude has surged more than 8% over the past two sessions following renewed U.S.-Iran military tensions, reigniting concerns over potential disruptions to energy supplies from the region. Brent oil surged to $97 a barrel amid growing US-Iran hostilities.

"The escalation of the U.S.-Iran conflict and the consequent 5% spurt in Brent crude overnight to $96 is a sentiment negative," V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Sectoral Performance and Stock Movers

Among the 30 Sensex firms, Asian Paints, HDFC Bank, Mahindra & Mahindra, HCL Tech, Bharat Electronics and Infosys were the major laggards. Adani Ports, Bajaj Finserv, Power Grid, NTPC and Titan were among the winners.

Hero MotoCorp shares dropped 5% as disappointing retail data revealed a significant volume loss despite record dispatch numbers. HDFC Bank shares were in focus, trading at ₹702 on the NSE, down 1.38 per cent, amid a slew of updates.

In contrast, Coal India shares soared over 4% to ₹419.65 on the NSE, defying weak market sentiment. The company increased its total coal supplies to 60.60 million tonnes (MT) in August FY 2026, 27, registering a 5.50% growth over the 57.40 MT supplied during the corresponding month last year.

Bond Market Turmoil and Currency Weakness

Government borrowing costs from the United States to Germany and Japan are at or near multi-decade peaks on heightened worries about inflation and rising interest rates, along with nagging anxiety about their debt loads. In the U.S., Treasury yields reversed course entirely, erasing the dip that followed Treasury Secretary Scott Bessent's announcement of an expanded buyback program.

Bond yields worldwide climbed as inflationary pressures built and rate-hike expectations solidified. The US 10-year Treasury yield climbed to around 4.79%, close to a 20-month high. Traders are pricing in a 67% chance of a rate hike at the Federal Reserve's policy meeting this month.

The rupee fell 2 paise to 94.97 against the US dollar amid weak equities and rising crude oil prices. The rupee opened at 94.89 against the U.S. dollar and briefly moved higher, before trading around the previous day's close for most of the session.

Global Markets Under Pressure

Wall Street closed lower on Tuesday, with the S&P 500 falling 0.7%, the Dow Jones Industrial Average declining 0.8% and the Nasdaq losing 1 per cent, as rising energy prices and bond yields intensified concerns of tighter monetary conditions ahead.

In Asian markets, South Korea's Kospi tumbled over 3%, Japan's Nikkei 225 index dropped nearly 3%. Shanghai's SSE Composite index and Hong Kong's Hang Seng index also traded lower. MSCI's Asia Pacific equities gauge dropped 1.2%, with stocks in Japan and South Korea sliding 2.5%.

"Indian markets are likely to remain under pressure as surging crude oil prices and rising global bond yields continue to weigh on investor sentiment amid the escalating conflict in the Middle East," Ponmudi R., CEO of Enrich Money, an online trading and wealth-tech firm, said.

Technical Outlook

Nifty futures (Sep) has a support band between 23,900 and 24,000. Nifty futures faces resistance at 24,200-24,250, with a breakout above 24,250 potentially lifting it to 24,300. A break below 23,900 could drag Nifty futures towards 23,800 and subsequently 23,600. The 6/44 advance-decline ratio indicates a strong bearish bias in the market. All sectors are trading in the red, with Nifty Auto and Nifty Realty leading the decline.

Foreign Institutional Investors (FIIs) bought equities worth ₹1,143.38 crore on Tuesday, according to exchange data.