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Sensex Tanks 800 Points, Nifty Dips Below 25K As Crude Spikes After US-Iran Clash

Indian markets reel from global aftershocks as oil surges past $79; investors brace for fallout

Mumbai, June 23: Markets opened lower and stayed there. The Sensex fell as much as 800 points, and the Nifty 50 slipped 177, breaking below the psychological 25,000-mark. The trigger: U.S. strikes on Iranian nuclear sites that sent crude prices spiking above $79 — a five-month high. But the real story isn’t the headline. It’s the collision course between geopolitics and market expectations.

Crude Surges, and So Do Inflation Fears

Traders didn’t need much convincing. Oil shot up, and within minutes, equity screens bled red. The math is simple: India imports over 85% of its oil. Every extra dollar per barrel shows up eventually in transport costs, manufacturing input prices, or LPG cylinders. With Brent crude up nearly 3% overnight, traders quickly repriced risk.

There’s also the Fed angle. Higher oil fuels inflation, which complicates the Federal Reserve’s rate-cut timeline — and by extension, impacts dollar flows into emerging markets. It’s no coincidence that FIIs have already started dialing down exposure, with risk-off sentiment clearly visible in today’s flows.

No Place to Hide: Broad-Based Selloff Across Sectors

Every one of the 13 BSE sectoral indices opened negative. IT was among the worst-hit, and not just because of macro fears. Many global clients are already delaying discretionary spends — add geopolitical overhang, and the outlook worsens.

Mid-cap and small-cap indices dropped around 0.6% each, not dramatic but telling. These are the first to get hit when retail sentiment sours, and today’s fall suggests that nerves are fraying.

Strait of Hormuz: The Market’s Red Line

For all the noise, what happens next hinges on Tehran. If Iran follows through on its veiled threats to choke the Strait of Hormuz — through which nearly a fifth of global oil flows — we’re in deeper trouble. It’s the difference between a blip and a structural risk.

Investors are watching whether this escalates into a regional standoff. That would pull in the Saudis, the Israelis, maybe even Russia. And suddenly, oil at $90 doesn’t sound wild.

RBI Will Likely Sit Tight — For Now

Don’t expect a policy pivot from the Reserve Bank of India just yet. The central bank has a history of waiting out geopolitical volatility. But that’s assuming oil doesn’t stay elevated too long. If it does, and retail inflation starts creeping back toward the upper tolerance band, there will be pressure — not just on policy, but on the rupee too.

For now, though, the RBI can stay put. There’s no panic in the bond market yet, and core inflation remains contained. But traders will be watching oil futures more closely than bond yields for the rest of the week.

Earnings Season Complicates the Backdrop

This would be a hard week even without a Middle East flashpoint. Q1 results are around the corner, and the street was already expecting a soft print from exporters, especially in IT and chemicals. With crude rising and the rupee under mild pressure, input costs could be the next wildcard.

One large-cap fund manager put it bluntly: “If this drags on for more than a few days, everything gets repriced — P/Es, FX assumptions, even demand growth.”

The Outlook: Wary, But Not Panicked

Volatility is back — that much is clear. India VIX jumped over 8% intraday. But there’s no evidence of a sell-everything mode. Traders are trimming risk, not fleeing it.

Still, this week will test nerves. If oil climbs further or Iran escalates militarily, expect more pain. For now, the correction looks orderly. But as history shows, when oil moves, markets don’t get to stay on autopilot.


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Arpit Thakur
Reporting Fellow at 

Arpit Thakur is a Reporting Fellow at Hindustan Herald, dedicated to covering the dynamic world of business and finance. A student at Amity University, Noida, Arpit leverages his academic insights to provide daily, well-researched analyses of market trends, corporate developments, and economic policies. He is committed to delivering clear and impactful financial news to our readers.

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