Sensex, Nifty fall as Iran sanctions fears keep crude worries alive

The Sensex traded between 77,201.66 and 77,789.40 during the session after opening at 77,629.56. The Nifty 50 opened at 24,285.05 and touched an intraday high of 24,313 before slipping to a low of 24,144.30.

In Short

• Equity markets ended lower on Monday amid US sanctions fears on Iran
• Nifty PSU Bank was the biggest sector loser; Nifty Metal rose strongly
• Crude prices stayed high despite some easing, keeping inflation concerns alive

equity markets ended lower on Monday as investors remained cautious ahead of fresh US sanctions on Iran, while elevated crude prices and rising bond yields continued to weigh on risk appetite. The BSE Sensex fell 171.72 points, or 0.22%, to 77,369.11, while the Nifty 50 declined 32.95 points, or 0.14%, to 24,219.05.

The Sensex traded between 77,201.66 and 77,789.40 during the session after opening at 77,629.56. The Nifty 50 opened at 24,285.05 and touched an intraday high of 24,313 before slipping to a low of 24,144.30.

The two benchmarks have now fallen around 1.3% over the past two weeks as investors assess the impact of the Middle East conflict on crude prices, inflation and bond yields.

The weakness was broad-based, with 11 of the 16 major Nifty sectoral indices ending in the red. Nifty PSU Bank was the biggest sectoral laggard, falling 0.93%, followed by Nifty Media, which declined 0.58%, Nifty Financial Services 25/50, which slipped 0.32%, and Nifty Private Bank, which fell 0.32%.

Nifty Auto declined 0.08%, Nifty Pharma fell 0.08%, Nifty Chemicals dropped 0.10% and Nifty Healthcare ended 0.04% lower. Nifty Consumer Durables also declined 0.32%, while Nifty MidSmall Healthcare fell 0.25%.

On the other hand, Nifty Metal was the standout performer, rising 1.59% on firm commodity prices. Nifty Realty added 0.60%, while Nifty MidSmall Financial Services gained 0.18%. Nifty IT rose 0.21%, Nifty Oil & Gas added 0.13% and Nifty FMCG edged up 0.04%.

Vinod Nair, Head of Research, Geojit Investments Limited, said caution dominated market sentiment as investors awaited fresh US sanctions on Iran.

He noted that Brent crude had eased on profit-taking but remained above $90 a barrel, supported by concerns over tighter Iranian oil supplies and continuing tensions around the Strait of Hormuz. He also pointed to the RBI's recent hawkish stance, which has pushed domestic bond yields higher and dampened risk appetite.

Nair said Indian equities drifted lower in line with weak Asian markets, with large-caps underperforming the broader market. He added that metals outperformed on firm commodity prices, while banking stocks came under pressure, with PSU banks trailing private-sector peers because of mark-to-market losses caused by the rise in sovereign bond yields.

METALS SHINE, PSU BANKS TAKE A HIT

The sectoral divergence was also visible in individual stocks. Tata Steel was the top Sensex gainer, rising 1.86%, followed by HCLTech, which added 1.30%, and Infosys, which gained 0.89%. Hindustan Unilever rose 0.50%, Sun Pharma added 0.47% and Indigo gained 0.43%.

At the other end, Adani Ports was the biggest Sensex loser, falling 1.30%. Bajaj Finance declined 1.26%, Bajaj Finserv dropped 1.22%, Axis Bank fell 0.85% and Trent slipped 0.87%. SBI declined 0.71%, while TCS fell 0.65%.

Among other notable moves, HDFC Bank gained 0.14%, Eternal added 0.12% and Maruti edged up 0.10%. Tech Mahindra ended flat. Reliance fell 0.49%, Bharti Airtel declined 0.53% and ICICI Bank lost 0.35%.

The broader market was relatively resilient compared with the benchmarks. The Nifty Midcap 50 rose 0.06% and Nifty Midcap 100 gained 0.13%, while Nifty 200 slipped 0.06% and Nifty 500 fell 0.08%. The Nifty Smallcap 100 declined 0.26%.

The India VIX, however, climbed 4.51% to 11.70, signalling increased caution among investors.

Crude oil remained a key factor for markets despite easing during the session. WTI crude was at $85.00 a barrel, down 2.37%, while Brent crude stood at $92.72, down 1.77%. Both remained elevated amid uncertainty over Iran's oil exports and the Strait of Hormuz.

US Treasury Secretary Scott Bessent is due to hold a press conference later on Monday after threatening to impose the "toughest sanctions" in history on Iran. Iran, in turn, has warned that it could shut down all oil exports from the Gulf if the economic pressure continues.

The nearly six-month-old US-Iran conflict has already pushed energy prices higher globally, keeping inflation concerns alive and adding to pressure on bond yields. For Indian equities, the combination of crude uncertainty, higher yields and geopolitical risk is likely to keep volatility elevated in the near term.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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