Stock markets tank 2% as elevated oil prices, US-Iran tensions weigh on sentiment

Mumbai: Equity benchmark indices ended lower for the fourth consecutive session on Tuesday, with the Sensex and Nifty tumbling nearly 2 per cent, as elevated crude oil prices and uncertainty surrounding the West Asia conflict clouded markets' confidence.

Unabated foreign fund outflows and the rupee depreciating to a lifetime low also hit investor sentiment.

Amid a widespread sell-off, the 30-share BSE Sensex tanked 1,456.04 points, or 1.92 per cent, to settle at 74,559.24. During the day, it dived 1,565.78 points, or 2 per cent, to 74,449.50.

The 50-share NSE Nifty dropped 436.30 points, or 1.83 per cent, to end at 23,379.55.

From the Sensex pack, Tech Mahindra, Adani Ports, HCL Tech, Tata Consultancy Services, Titan and Bharat Electronics were among the major laggards.

On the other hand, the State Bank of India was the only winner from the pack.

Brent crude, the global oil benchmark, traded 2.75 per cent higher at USD 107.1 per barrel.

The rupee depreciated 35 paise to close at an all-time low of 95.63 (provisional) against the US dollar on Tuesday.

US President Donald Trump on Monday said the ceasefire with Iran was at its "weakest" and on "massive life support", a day after he rejected Tehran's proposal to end the months-long war as "totally unacceptable".

"It is at its weakest… After reading that piece of garbage they sent us... It's on life support, massive life support," Trump told reporters at the Oval Office in response to a question on the ceasefire with Iran in the wake of the rejection of the peace proposal.

Hariprasad K, Research Analyst and Founder, Livelong Wealth, said, unlike a routine profit-booking phase, the current decline appears to be driven by a broader "confidence shock" in the market.

"Investors are increasingly interpreting recent policy messaging and austerity-oriented commentary as an indication that policymakers may be preparing for a tougher macroeconomic environment ahead," he said.

The pressure on Indian equities is now being amplified by a macro "triple hit" - crude oil prices hovering near USD 105–107 per barrel, the rupee slipping to a fresh record low against the US dollar, and continued aggressive FII outflows, Hariprasad added.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 8,437.56 crore on Monday, according to exchange data.

"Domestic equities remained under pressure, with the rupee weakening to record lows amid rising crude oil prices linked to escalating tensions in West Asia, along with FII outflows. The decline was broad-based, led by IT and realty stocks," Vinod Nair, Head of Research, Geojit Investments Limited, said.

In Asian markets, South Korea's benchmark Kospi, Shanghai's SSE Composite and Hong Kong's Hang Seng ended lower, while Japan's benchmark Nikkei 225 settled higher.

Markets in Europe were trading lower.

US markets ended in positive territory on Monday.

On Monday, the BSE benchmark tanked 1,312.91 points or 1.70 per cent to settle at 76,015.28. The Nifty dropped 360.30 points or 1.49 per cent to end at 23,815.85.