Indian equities slumped and the rupee fell to 93.98 against the U.S. dollar on Monday, tracking declines across Asia as the Middle East conflict kept oil prices high and raised concerns over global growth.
The Nifty 50 and the Sensex are down 10.6% each since the Iran war began at the end of February as foreign investors pulled out, while surging oil prices stoked inflation fears and darkened the country's growth outlook.
The Nifty 50 fell 2.6% to 22,512.65 on Monday, while the Sensex lost 2.46% to 72,696.39, both slipping to oversold territory.
All 16 major sectors fell. Small-cap and mid-cap indexes dropped 3.9% each. The volatility index, which tracks expected swings over 30 days, rose to 27.17 during the session, its highest since early June 2024.
<Section xmlns="http://CoreService.Lynx.ThomsonReuters.com/2009/03/02/Schemas"><Section>Asian markets fell 3.6% and European shares fell to a four-month low, as Middle East tensions intensified, dimming hopes of a near-term de-escalation in the war, now in its fourth week. [MKTS/GLOB]
Brent crude hovered near $113 a barrel, posing a challenge for India, one of the world's largest oil importers. [O/R]
High oil prices and foreign outflows of nearly $10 billion in March have been pressuring the rupee, while a gauge of EM currencies slid to a four-month low.
"A jump in oil prices, continued foreign outflows and consequently, a steep correction in rupee exchange rate due to Iran war have triggered a sharp fall in domestic stocks," said G Chokkalingam, founder and head of research at Equinomics Research.
"External economic conditions are deteriorating due to the war and could become more adverse in the short-term, creating significant short-term pressure for equities," Chokkalingam said.
HDFC Bank, the benchmarks' biggest weight, fell about 4.7% on the day and 11.7% over three sessions after the abrupt resignation of its part-time chairman.
The metals sub-index dropped 4.8%, tracking lower global prices.
