A spike in oil prices dragged the Sensex 373.93 points, or 0.49%, lower to close at 76,570.35 on Tuesday.
The Nifty50 fell 141.35 points, or 0.59%, to settle at 23,914.45, extending the benchmark indices’ losing streak to a third straight session.
The sell-off came after the US and Iran exchanged overnight strikes, stoking fears of supply disruptions from the Strait of Hormuz and sending Brent crude up 0.76% to $95.37 a barrel.
Nifty Auto led the sectoral decline with a 2% drop, while IT and Media stocks also underperformed; Oil and Gas, PSU Bank and Realty stocks were the exceptions.
Top Nifty50 losers included Eicher Motors, Wipro and Bajaj Auto, as rising bond yields added further pressure on investor sentiment.
Brent crude rose 0.76% to $95.37 per barrel during the session, adding to inflation concerns among investors.
Nifty Auto was the worst-hit sectoral index, declining 2%, with Nifty IT and Nifty Media also underperforming during the session.
In contrast, Nifty Oil and Gas, PSU Bank and Realty indices outperformed, providing some counterbalance to the broader market decline.
Eicher Motors, Wipro and Bajaj Auto were among the top losers on the Nifty50 index during the session.
Broader markets also came under pressure, with the Nifty MidCap index ending 0.53% lower and the Nifty SmallCap index down 0.37%.
This marked the third straight session of losses for the benchmark indices, as rising bond yields further dented investor risk appetite.
Rising bond yields typically make fixed-income investments more attractive relative to equities, prompting some investors to shift allocations away from stocks.
Markets will be closely watching for further developments in the Middle East, given the direct link between regional tensions and global crude oil supply concerns.
The US and Iran exchanged strikes overnight, intensifying fears of further supply disruptions from the Strait of Hormuz, a key global oil shipping route.
Photo of the Bombay Stock Exchange building, Wikimedia Commons, CC BY 2.0
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