Indian markets are under immense pressure on Monday on the back of the escalating tensions in the Middle East. Equities fell sharply at open and are broadly trading around those levels at 10:00 am. Nifty 50 is trading 1.56%, or over 370 points, lower at 23,674, while Sensex is also trading with cuts of 1.69%, or over 1,300 points lower, at 76,286.
Sectorally, all indices were in the red, with PSU Bank trading 2.5% lower, followed by Nifty Bank, and Auto.
The broader market was also facing quite some pressure, with the Nifty Midcap 150 trading with cuts of 1.10% and the Nifty Smallcap 250 falling almost 0.99%.
Here are three key reasons dragging the markets on Monday.
Middle East Tensions
US President Donald Trump said the US Navy will "immediately" begin a blockade to stop ships from entering or leaving the Strait of Hormuz, after US-Iran peace talks in Pakistan ended without an agreement. Iran has demanded the right to collect tolls from vessels traveling through the strait, but Trump said no one who pays them will "have safe passage on the high seas."
Iran's Revolutionary Guard Navy said that military vessels approaching the Strait of Hormuz “will be met with a firm and forceful response,” according to two semi-official Iranian news agencies. Earlier, the United States and Iran ended 21 hours of face-to-face talks in Islamabad without reaching a deal, leaving the fate of the fragile, two-week ceasefire still unclear. The war that has killed thousands of people and shaken global markets has entered its seventh week.
Get the latest updates on US, Israel-Iran war here.
Weak Global Cues
Asian shares dropped 1%, while S&P 500 Index futures fell 0.8% as higher oil prices threatened to weigh on economic growth. Tech companies such as Taiwan's MediaTek Inc. showed resilience, supported by robust sales. European shares were primed to drop 1.5% at the open.
The dollar, which has been the haven of choice since the Middle East conflict began, strengthened against all its Group-of-10 peers. Treasuries fell and Japan's 10-year yield rose to 2.49%, the highest since 1997 on concern higher energy prices will push up inflation.
Get the latest updates on how the stock market is doing here.
Brent Crude Surges
Global energy markets jolted higher after the US announced a blockade targeting vessels linked to Iran through the Strait of Hormuz, following the collapse of diplomatic talks over the weekend. Benchmark Brent crude surged over 8% to cross the $103 per barrel mark, while US crude and European natural gas prices also recorded sharp gains.
The move marks a significant escalation in an already volatile geopolitical environment, intensifying concerns around supply disruptions. Brent crude for June delivery climbed to $103.21 per barrel, while West Texas Intermediate rose to $105.12. Meanwhile, European gas futures saw intraday spikes nearing 18%, underscoring the broader energy market stress. The blockade, set to be enforced by US forces, applies specifically to ships moving in and out of Iranian ports, adding a new layer of uncertainty to global oil flows.
ALSO READ: Brent Crude Jumps Past $103 Again As US Blockade Of Hormuz Spikes Supply Fears
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