Indian equities closed sharply lower on Tuesday, hitting their weakest levels so far this month as the risk of a prolonged conflict in the Middle East darkened the country’s macroeconomic outlook. The S&P BSE Sensex declined 0.5% to 78,154, while the NSE Nifty 50 also fell 0.5% to 24,472.
Crude oil and refined fuel prices extended their gains during the session after US President Trump hardened his stance on Iran, reiterating that the United States can secure a deal by waiting for further deterioration in Iran’s economy. Rising oil prices increase the cost of India’s largest import and amplify capital outflows, putting additional pressure on the rupee and reducing foreign investor appetite for domestic assets. Higher energy costs also raise the likelihood that the Reserve Bank of India will be forced to tighten monetary policy.
Financial stocks ended lower, with IndusInd Bank, Axis Bank, and Bajaj Finance each dropping more than 1%. Energy-sensitive consumer goods firms also declined, with Nestlé India and Hindustan Unilever falling over 1%.
