The Indian stock market witnessed a sharp selloff in Monday’s trade on 11 May. as investor sentiment weakened amid a sharp rebound in crude oil prices after hopes of a near-term peace deal in West Asia faded. Adding to the pressure, realty and consumer durable stocks came under heavy selling after Prime Minister Narendra Modi urged a spate of measures.
The Nifty ended the session with a steep 1.51% decline at 23,811, while the Sensex settled at 76,072, down 1.73% from previous close. Both benchmark indices recorded their biggest single day drop since April 24.
The broader markets also witnessed heavy selling pressure, with both the Nifty Midcap 100 and Nifty Smallcap indices losing nearly 1% each. Hopes of a quick resolution between the U.S. and Iran were clouded after U.S. President Donald Trump described Iran’s response to his peace proposal as “totally unacceptable.”
Iran on Sunday reportedly released a proposal to end the war on all fronts, which included a demand for compensation for war damages and emphasised Iranian sovereignty over the Strait of Hormuz. The U.S., however, had proposed ending the fighting first before initiating talks on more contentious issues, including Iran’s nuclear programme.
Markets initially viewed the development as a possible off-ramp to the conflict before Trump rejected the terms outright. Following his rejection of Iran’s latest proposal, crude oil prices regained strength, with Brent crude rebounding to $105 a barrel.
The Strait of Hormuz remains effectively closed as Washington and Tehran continue to struggle toward a diplomatic resolution, keeping energy prices elevated and fuelling concerns over inflation.
Meanwhile, real estate, consumer durables, jewellery, and travel-linked stocks witnessed sharp selling pressure after PM Modi made seven key appeals, including working from home, reducing petrol and diesel consumption, conducting online meetings, limiting travel, and refraining from non-essential gold purchases for a year.
(more to come)