Domestic markets snapped a five-day winning streak on Thursday, with the Sensex plunging over 900 points, as investor sentiment turned cautious amid renewed doubts over the durability of the Iran-US ceasefire and a rebound in crude oil prices.
The sharp fall comes just a day after Dalal Street , with the Sensex closing at 76,631.65, down 931.25 points or 1.20%, while the Nifty slipped 222.25 points, or 0.93%, to 23,775.10.
Fresh concerns over tensions in West Asia weighed on markets, with the ceasefire between the United States and Iran .
Reports of continued escalation have raised doubts over how long the truce can hold, prompting investors to turn risk-averse and lock in recent gains.
Adding to the pressure was a , which reversed earlier declines as concerns around disruptions in the Strait of Hormuz resurfaced. For India, higher crude remains a key risk, with the potential to stoke inflation, widen the current account deficit and pressure the rupee.
The sell-off also reflects profit booking after the previous session’s sharp rally, when benchmark indices surged on easing crude prices and ceasefire optimism.
With uncertainty back in play, traders chose to reduce exposure rather than carry positions into a volatile environment.
Market participants said the rally seen earlier in the week was largely driven by short covering and value buying in beaten-down sectors, particularly financials. However, the lack of clarity on the geopolitical front has made the recovery look fragile.
Broad-based weakness was visible across sectors, with financials and IT stocks among the key drags. Midcap and smallcap stocks also edged lower, indicating that the risk-off sentiment was not limited to frontline indices.
Vinod Nair, Head of Research, Geojit Investments Limited, said, “Ceasefire-led optimism faded as renewed US–Iran tensions and ongoing restrictions at the Strait of Hormuz pushed crude back up, reviving concerns around India’s inflation. Domestically, profit booking, rising 10-year bond yields, and rupee weakness reduced near-term risk appetite.”
“Financials led the decline after the previous session’s sharp rally amid sustained FII selling, while broader markets held relatively steady. Globally, the hawkish tilt in the latest FOMC minutes, signaling openness to rate hikes, combined with geopolitics-driven oil volatility, raised the hurdle for EM flows,” he added.
He also warned that if crude sustains above current levels, earnings downgrades for FY27 could re-emerge.
“That said, valuations remain supportive after the recent correction, and durable progress on the geopolitical front could quickly restore confidence in the medium-term earnings trajectory,” Nair said.
Analysts have told IndiaToday.in that , with the trajectory closely tied to developments in West Asia and movements in crude oil prices.
For now, the takeaway is straightforward. The rally may have been sharp, but the underlying uncertainty hasn’t gone away.
Analysts said markets are likely to remain volatile in the near term, with the trajectory closely tied to developments in West Asia and movements in crude oil prices.
For now, the takeaway is straightforward. The rally may have been sharp, but the underlying uncertainty hasn’t gone away.