Indian equity markets witnessed a broad-based selloff on Monday, driven by escalating geopolitical tensions in the Middle East, a global tech-led market fall, and rising crude oil prices. 

The opening trade slump erased over ₹5 lakh crore from investor wealth, bringing the combined market capitalization of BSE-listed companies down to approximately ₹456 lakh crore during early trades on Monday.

Benchmark indices faced severe pressure from the opening bell. The Sensex initially plummeted by over 700 points to touch the 73,500 mark before seeing minor recovery. As of 12:10 PM, the Nifty 50 was trading at 23,206.85, attempting to recover from an intraday low of 23,070.15.

The market bloodbath was driven by three primary factors:

1. Middle East Escalation and Surging Crude Oil Prices Geopolitical tensions intensified as Iran launched a barrage of missiles at Israel in retaliation for Israeli strikes in Beirut. In response, Israel reportedly targeted military installations in western and central Iran, with explosions reported in Tehran, Tabriz, and Isfahan. This direct military confrontation jeopardized a fragile ceasefire reached in April. 

US President Donald Trump has intervened, urging Israeli Prime Minister Benjamin Netanyahu against further retaliation to preserve ongoing peace negotiations.

The conflict immediately disrupted energy markets, sparking fears over the safety of the Strait of Hormuz. Brent crude surged by more than 3.5% to cross $96.40 a barrel, while West Texas Intermediate (WTI) climbed above $93.50. For India, which relies heavily on crude imports, this surge amplifies concerns regarding inflation and a widening current account deficit.

2. Global Market and Tech Selloff A massive selloff in global equities weighed heavily on domestic sentiment. Wall Street suffered steep losses on Friday after stronger-than-expected US employment data—with 1,72,000 jobs added in May versus an estimated 80,000—dampened hopes for near-term interest rate cuts by the Federal Reserve. This triggered a historic rotation away from tech and AI stocks, causing the Nasdaq to crash by nearly 5%.

The ripple effects were felt across the Asia Pacific markets on Monday. South Korea’s Kospi plunged nearly 9%, triggering a trading halt, while Japan’s Nikkei 225 dropped around 4%.

3. IT Stock Volatility and Foreign Investor Outflows Indian Information Technology (IT) stocks, which had rallied in recent sessions, faced intense profit-booking following the global tech rout. Heavyweights such as TCS, Infosys, and HCL Technologies declined between 1.3% and 2%. Wipro was down more than 6%.

Furthermore, persistent offloading by Foreign Institutional Investors (FIIs) exacerbated the market’s weakness. FIIs sold Indian equities worth ₹8,776 crore in the cash market on Friday, adding to the ₹3.27 lakh crore pulled out so far this year. The Indian Rupee also weakened, hitting an intraday low of 95.65 against the US dollar.

Sectoral and Stock-Specific Impact The selloff was seen across all major sectors, with the Nifty IT, Realty, Metal, and Auto indices all declining by over 1%. The broader markets also faced pressure, as both the Nifty Midcap and Smallcap indices recorded losses hovering around 1%.

  • Top Losers: Mahindra & Mahindra, TCS, Trent, InterGlobe Aviation (IndiGo), Bajaj Finance, Tata Steel, and Infosys led the losses on the benchmark indices.
  • Top Gainers: Amid the broader decline, select stocks traded in the green. Sun Pharma, Axis Bank, Power Grid, and State Bank of India registered gains.
  • Broader Market Movers: PhysicsWallah shares surged by over 9%, HG Infra Engineering climbed 7% following the completion of a major expressway project milestone, and Caplin Point advanced by 5%.

Despite the severe headwinds, market experts note that India’s strong FY26 GDP growth of 7.7% and better-than-expected Q4 earnings could provide underlying support if selling intensifies. Furthermore, the Reserve Bank of India (RBI) recently introduced measures to attract foreign inflows—including the removal of tax liabilities on FPI bond investments—which analysts estimate could draw $50 billion to $60 billion into Indian debt and equities over the coming months.