Dalal Street bleeds as US-Iran tensions escalate; Sensex crashes over 1,650 points

New Delhi: Indian equity benchmarks suffered their steepest single-day decline in weeks on Wednesday as escalating tensions in the Middle East sparked a global risk-off sentiment, sending investors rushing out of equities. The BSE Sensex plunged 1,677.55 points, or 2.15%, to close at 76,503.17, after falling nearly 1,900 points during the session. The NSE Nifty50 dropped 516.80 points, or 2.12%, to settle at 23,881.90, slipping below the psychologically important 24,000 mark. The sharp sell-off came after US President Donald Trump declared that the interim ceasefire arrangement with Iran was "over" following fresh US military strikes, raising fears of a wider conflict in West Asia and a disruption to global oil supplies. Why did the market crash? Analysts attributed Wednesday's rout to a combination of global and domestic factors. Investor sentiment deteriorated after Trump ruled out further negotiations with Iran and said he no longer considered the ceasefire arrangement valid. The renewed hostilities raised concerns over stability in the oil-rich Middle East and the security of shipping through the Strait of Hormuz. Crude oil prices surge Brent crude climbed above $76 a barrel, reviving fears of imported inflation for India, which imports more than 85% of its crude oil requirement. Higher crude prices typically increase fuel costs, pressure corporate margins and widen the country's current account deficit. Broad-based selling across sectors The sell-off was widespread, with every major sectoral index ending in the red. Oil marketing companies, aviation, paints, auto, banking and financial stocks witnessed heavy profit booking as investors moved towards safer assets. Global risk aversion Asian markets also traded weak as investors assessed the possibility of a prolonged geopolitical conflict, prompting a shift away from risk assets globally. Biggest losers Oil marketing companies were among the worst hit as rising crude prices threaten to squeeze their marketing margins. BPCL, HPCL fell around 4%, IOC lost ground, while InterGlobe Aviation (IndiGo) dropped amid concerns that higher aviation turbine fuel costs could hurt profitability. Asian Paints also declined as expensive crude raises input costs for paint manufacturers. Banking, financial and auto stocks also witnessed significant selling pressure, dragging benchmark indices lower. Stocks that gained Amid the broad market weakness, upstream oil producers outperformed as higher crude prices are expected to improve their earnings. ONGC emerged among the notable gainers, benefiting from the rise in global oil prices. A handful of defensive stocks also managed to end in the green even as market breadth remained decisively negative. Market participants will closely monitor further developments in the US-Iran conflict, movements in crude oil prices and foreign institutional investor (FII) flows. Any escalation in geopolitical tensions or a sustained rise in oil prices could keep volatility elevated in the near term, while diplomatic progress may help restore investor confidence.