The stock market extended losses for a second consecutive session on Monday, with benchmark indices ending nearly 1 percent lower amid escalating tensions in the Middle East, a sharp rise in crude oil prices and growing concerns that the US Federal Reserve could keep interest rates elevated for longer.
The Sensex closed 719 points lower, or 0.97 percent, at 73,524 after touching an intraday low of 73,318. The Nifty 50 fell 244 points, or 1.04 percent, to close at 23,123, having slipped to 23,070 during the session.
The sell-off was broad-based, with the Nifty Smallcap 100 dropping 1.92 percent and the Nifty Midcap 100 declining 1.40 percent. Auto, metal, IT, realty and oil & gas stocks witnessed heavy selling, while healthcare was the only sector to end in positive territory.
Market sentiment weakened as renewed conflict in the Middle East pushed crude oil prices closer to $100 a barrel. Investors also became increasingly cautious about the sustainability of the AI-led rally in global technology stocks. Strong US labour market data and persistent inflation further raised concerns that interest rates could remain elevated for longer, pushing bond yields and the dollar higher. Although India could outperform some global peers if the technology-led correction deepens, rising oil prices and interest-rate uncertainty may continue to limit market gains.
Asian equities witnessed a sharp sell-off, mirroring weakness across global markets.
Japan's Nikkei fell 3.8 percent.
South Korea's Kospi dropped 4.8 percent after recovering from steeper intraday losses.
Hong Kong's Hang Seng declined nearly 2 percent.
China's CSI 300 slipped 1.5 percent.
The weakness followed a sharp decline on Wall Street on Friday, when the Nasdaq recorded its biggest single-day fall since April 2025.
Investor sentiment deteriorated after Israel launched fresh strikes on military targets in Iran, following attacks in Lebanon over the weekend.
Iran responded with missile strikes on Israeli targets, raising fears of a broader regional conflict and threatening ongoing diplomatic efforts involving the US.
The heightened geopolitical risk prompted investors to move away from riskier assets, including equities.
Oil prices surged as concerns grew over potential disruptions to supplies from the Middle East. Brent crude climbed 3.39 percent to $96.24 a barrel, while US crude rose 3.17 percent to $93.41. Crude prices have gained more than 50 percent since March.
For India, which imports the bulk of its crude oil requirements, higher oil prices raise concerns over inflation, the trade deficit and pressure on the rupee.
Markets were also unsettled by stronger-than-expected US employment data. The robust labour market has reduced hopes of policy easing and strengthened expectations that the Federal Reserve could raise rates later this year.
The probability of a US rate hike by December has risen sharply in recent weeks, increasing concerns over global liquidity and foreign investment flows into emerging markets such as India.
The Nifty continues to trade below key moving averages, reflecting a weak technical structure. Analysts see the 23,100-23,000 zone as a crucial support area. A decisive break below this range could intensify selling pressure and drag the index towards 22,700.
The near-term outlook remains cautious as long as the Nifty trades below the 23,500-23,550 resistance zone. Immediate support is placed around 23,100, with the possibility of further weakness towards the 23,000-22,800 range if that level is breached.
