Indian stocks fell to their lowest level in almost six months on Monday as hopes of a US-Iran breakthrough faded, pushing crude oil further above $100 a barrel and deepening worries over higher interest rates.
Global inflation, US yields add to market pressure
The benchmark Nifty 50 tumbled 1.6% to close at 22,780.25, its lowest level since 2 April, while the Sensex declined 1.5%. Crude staying above the $100 mark is weighing on sentiment towards Indian equities, said Gaurav Dua, chief investment officer at Standard Chartered Securities India. Brent has risen above $100 a barrel, US 10-year yields are near 5%, and rising global inflation is prompting central banks to hike rates.
Global markets turned risk-off, with stocks in Japan, South Korea and China sliding and US Dow futures facing pressure.
US President Donald Trump said he had rejected an Iranian proposal to reopen the Strait of Hormuz and end the fighting, while Iran said diplomacy remained the only way out of the conflict with the US and Israel, according to reports. “The rising expectations of a rate hike and a possible hawkish commentary in the RBI’s ( Reserve Bank of India ’s) forthcoming monetary policy review is an added overhang on the markets,” he said. capital-flight risks have also risen with rate hikes in developed markets, the brokerage firm said While FCNR flows have strengthened India’s macro buffers.
Monday’s decline took the Nifty ’s fall this year to about 13%, making it one of the worst-performing markets in Asia. The Nifty PSU Bank index fell 3.2%, while the realty and oil & gas indexes fell about 2%, among the worst-hit sectors on Monday. The rupee declined 0.2% to 95.9850 per dollar.
