Indian benchmark indices experienced a significant decline in early trading on Wednesday. This drop was triggered by new US military strikes on Iran, which have escalated tensions in the Middle East. As a result, oil prices surged, causing jitters in global markets and impacting investor sentiment.
Iran, meanwhile, reported missile and drone attacks against US positions in Jordan, Bahrain and Iraq. The immediate trigger was a fresh wave of US strikes against Iranian military targets, followed by Iranian retaliation against US assets in the region. The biggest concern for investors is oil. For India, which imports a large share of its crude oil requirement, higher oil prices can widen the import bill and put pressure on inflation, the rupee and corporate margins. The surge in oil prices has also pushed global bond yields higher as traders increased bets that the US Federal Reserve could raise interest rates to counter renewed inflationary pressure. Higher US rates make emerging markets such as India less attractive to global investors and can encourage foreign capital to move towards US assets. That combination — higher crude prices, renewed inflation fears and the possibility of tighter US monetary policy — is weighing on risk appetite across Asian markets and feeding into the sell-off in Indian equities. Another reason why this war has markets on the edge is the Strait of Hormuz, through which a significant share of global oil supplies traditionally moves. The latest fighting has involved threats to shipping, attacks on commercial tankers and attempts to disrupt traffic through the waterway. A prolonged war could keep crude prices elevated, intensify inflationary pressures and weigh further on global equities.
Investors are therefore closely watching whether the latest US-Iran strikes remain contained in the region or again trigger a broader escalation. The Nifty 50 fell 0.82% to 23,858, while the BSE Sensex shed 0.61% to 76,471.32 as of 9:15 am. All 16 major sectors were trading in the red, while the broader small-cap and mid-cap indices also declined. Brent crude climbed to around $96.50 a barrel after the latest strikes, having earlier touched a near-six-week high. Oil is already up more than 45% this year, and any sustained disruption around the Strait of Hormuz could put further pressure on global energy supplies and prices.
The US Central Command said its latest operation targeted Iranian air defence sites, radar systems, maritime assets, mine-laying capabilities and communications sites.
