The broad-based decline reflected investor caution after renewed hostilities involving the United States and Iran, coupled with weakness in global technology stocks and concerns over the impact of higher oil prices on India’s economy.
The BSE Sensex fell as much as 707 points, or around 0.9 per cent, to 77,444.79, while the Nifty 50 dropped 0.8 per cent to an intraday low of 24,149.90.
Global cues weigh on Indian markets
Market participants attributed the decline to weak global sentiment following losses on Wall Street.
According to Rajesh Palviya, Head of Research at Axis Direct, US markets ended sharply lower as technology stocks, particularly semiconductor and artificial intelligence-related companies, came under heavy selling pressure.
The Nasdaq declined 1.40 per cent, while the S&P 500 lost nearly 1 per cent and the Dow Jones Industrial Average fell 0.77 per cent.
The weakness also spread across Asian markets, which opened lower on Monday, reflecting investor concerns over global economic uncertainty and geopolitical developments.
Crude oil remains the biggest concern
Analysts said rising crude oil prices remain the most significant risk for Indian markets.
Brent crude was trading close to 90 US dollars per barrel, its highest level in nearly a month, amid fears that escalating tensions between the United States and Iran could disrupt oil supplies through the strategically important Strait of Hormuz.
Higher crude prices generally increase India’s import bill, place upward pressure on inflation and could widen the country’s current account deficit.
Palviya said sustained strength in oil prices would remain a key factor influencing domestic market sentiment over the coming sessions.
Limited impact on IT sector
Despite the sharp decline in global technology stocks, analysts believe India’s information technology sector may remain relatively insulated.
India’s IT services industry has limited direct exposure to semiconductor manufacturing, which has been at the centre of the recent weakness in global technology shares.
Palviya noted that while global sentiment remains cautious, India’s technology sector is structurally different from many international peers, potentially limiting the overall impact.
Market participants are nevertheless expected to closely monitor developments in overseas markets for further direction.
Commodity markets reflect geopolitical risks
Crude oil prices also remained in focus in commodity markets.
Aamir Makda, Commodity and Currency Analyst at Choice Broking, said US West Texas Intermediate (WTI) crude resumed trading with a gap-up opening near 85 US dollars per barrel, extending gains recorded during the previous week.
According to Makda, heightened geopolitical tensions between the United States and Iran have increased fears of supply disruptions from the Middle East, supporting higher crude prices.
He added that MCX Crude Oil August futures also opened significantly higher and could remain elevated if key support levels continue to hold.
Investors adopt cautious approach
Apart from geopolitical concerns, investors are also monitoring domestic political developments, including disruptions to Parliament proceedings, which have contributed to market uncertainty.
The combination of international and domestic risks prompted investors to reduce exposure to equities, resulting in broad-based selling across sectors.
Financials, energy-sensitive industries and export-oriented companies remained under close watch as traders assessed the potential impact of sustained higher oil prices and global volatility.
Outlook remains dependent on global developments
Market experts believe investor sentiment will continue to be driven largely by developments in the Middle East, movements in crude oil prices and global equity market performance.
Any further escalation in geopolitical tensions or a sustained rise in energy prices could increase volatility in Indian equities.
At the same time, easing geopolitical concerns or stabilisation in crude prices may provide support for a market recovery.
For now, investors are expected to remain cautious while closely tracking global events, inflation expectations and corporate earnings for fresh market direction.