The Sensex shed 373.93 points, or 0.49%, to close at 76,570.35 on Tuesday, as oil prices and bond yields both spiked.
The Nifty50 fell 141.35 points, or 0.59%, to end at 23,914.45, extending the benchmark indices’ decline to a third straight session.
Overnight strikes between the US and Iran drove the sell-off, raising fears of supply disruptions from the Strait of Hormuz and lifting Brent crude 0.76% to $95.37 a barrel.
Nifty Auto was the biggest sectoral loser, down 2%, with IT and Media also weak, while Oil and Gas, PSU Bank and Realty stocks outperformed.
Eicher Motors, Wipro and Bajaj Auto were among the top Nifty50 losers as rising bond yields added to the pressure on the broader market.
Rising bond yields typically make fixed-income investments more attractive relative to equities, prompting some investors to shift allocations away from stocks.
Markets will be closely watching for further developments in the Middle East, given the direct link between regional tensions and global crude oil supply concerns.
The US and Iran exchanged strikes overnight, intensifying fears of further supply disruptions from the Strait of Hormuz, a key global oil shipping route.
Brent crude rose 0.76% to $95.37 per barrel during the session, adding to inflation concerns among investors.
Nifty Auto was the worst-hit sectoral index, declining 2%, with Nifty IT and Nifty Media also underperforming during the session.
In contrast, Nifty Oil and Gas, PSU Bank and Realty indices outperformed, providing some counterbalance to the broader market decline.
Eicher Motors, Wipro and Bajaj Auto were among the top losers on the Nifty50 index during the session.
Broader markets also came under pressure, with the Nifty MidCap index ending 0.53% lower and the Nifty SmallCap index down 0.37%.
This marked the third straight session of losses for the benchmark indices, as rising bond yields further dented investor risk appetite.
Photo of the Bombay Stock Exchange building, Wikimedia Commons, CC BY 2.0
