Stock markets opened sharply lower on Monday as investors reacted to rising tensions in the Middle East, higher oil prices and weakness in global markets.
The S&P BSE was down 803.67 points, or 1.08%, at 73,439.67 in early trade, while the NSE Nifty50 fell 236.25 points, or 1.01%, to 23,130.45.
The selloff was broad-based, with almost all major stocks trading in the red. Investors turned cautious after fresh conflict in the Middle East pushed oil prices higher and raised concerns about inflation and global economic growth.
The biggest reason behind Monday’s fall is the renewed conflict in the Middle East.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said global and domestic factors are creating pressure on markets.
“There are strong headwinds for the market as trading begins for the week. The sharp cut of 4.18% in Nasdaq last Friday has rattled global markets with tech dominated South Korea and Taiwan facing big sell-off. The escalation of conflict in West Asia, with firing missiles at in retaliation to Israel’s aggression in Lebanon, has hardened crude prices. Brent has moved above $96,” he said.
Over the weekend, tensions escalated after Iran launched missiles at Israel following Israeli strikes on Beirut. The developments reduced hopes of a quick end to the conflict and raised fears of disruption to global oil supplies.
As a result, Brent rose above $96 per barrel. Higher oil prices are generally seen as negative for India because the country imports most of its crude oil requirements. Costlier oil can increase inflation, weaken the rupee and put pressure on economic growth.
Investors were also worried after a sharp fall in US technology stocks on Friday. The Nasdaq index dropped more than 4%, triggering selling across Asian markets, especially in technology-heavy countries such as South Korea and Taiwan.
Another factor weighing on sentiment is the growing belief that the US Federal Reserve may keep interest rates higher for longer after strong jobs data in the United States.
The selling was visible across almost every sector.
Nifty Realty was the worst performer, falling 1.93%. Nifty IT declined 1.72%, while Nifty Metal slipped 1.67%.
Nifty Auto fell 1.39%, Nifty Oil & Gas lost 1.15%, and Nifty Financial Services dropped 0.87%.
Even broader markets were under pressure. The Nifty Midcap 100 fell 0.86%, while the Nifty Smallcap 100 lost 0.62%.
India VIX, often called the market’s fear gauge, jumped more than 9%, indicating rising nervousness among investors.
Among Sensex stocks, Mahindra & Mahindra emerged as the biggest loser, falling 2.26%.
Tata Steel dropped 2.06%, InterGlobe Aviation (IndiGo) fell 2.04%, Eternal declined 1.85%, and TCS lost 1.83%.
Infosys slipped 1.50%, HCL Technologies fell 1.43%, Larsen & Toubro declined 1.36%, and Maruti Suzuki dropped 1.31%.
The weakness in technology stocks continued after the sharp selloff seen in global tech shares on Friday.
Despite the broad selloff, a few stocks managed to stay in positive territory.
Sun Pharmaceutical Industries was the top gainer on the Sensex, rising 0.64%.
Other gainers included Axis Bank, which was largely flat but outperformed the broader market, while most heavyweight stocks traded lower.
Vijayakumar believes Indian markets could see some support from domestic investors if the selloff deepens.
“It is important to note that the sell-off in US on Friday was a tech-led sell off. This can trigger a rotation from AI trade to non-AI trade which can be beneficial for India. GDP growth for FY26 coming at 7.7% and the better-than-expected Q4 results can provide fundamental support to the market,” he added.
Investors will closely track developments in the Middle East, movements in crude oil prices and signals from the US Federal Reserve on interest rates.
Any easing in geopolitical tensions could help improve sentiment, while a further rise in oil prices may keep markets under pressure in the near term.