Sensex, Nifty hammered as Brent tops $108; will oil, yields keep markets under pressure?

Indian equity benchmarks came under heavy selling pressure on Monday as rising crude oil prices amid escalating West Asia tensions, elevated global bond yields and persistent foreign fund outflows weighed on investor sentiment.

Brent crude oil prices rose more than 4 per cent during the session after US President Donald Trump rejected Iran's latest peace proposal. Brent crude was trading at $108.64 per barrel at the last check.

The 30-share BSE Sensex pack tumbled 1,124.02 points or 1.52 per cent to settle at 72,771.72, while the NSE Nifty50 index declined 360.25 points or 1.56 per cent to close at 22,780.25.

The high selling pressure was also visible across the broader market as Nifty Midcap100 slumped 1.63 per cent and Nifty Smallcap100 declined 1.85 per cent. India VIX, a gauge of expected volatility in the equity market, spiked 12.54 per cent to 13.69.

The combined market capitalisation (m-cap) of BSE-listed companies fell to Rs 474.47 lakh crore from Rs 481.88 lakh crore in the previous session. The decline of around Rs 7.41 lakh crore reflected the sharp fall in equities during Monday's session.

Vinod Nair, Head of Research at Geojit Investments, said, "Bears remained firmly in control as the market breached a key psychological support level, reflecting growing investor caution amid deteriorating global macro conditions. The US rejection of the ceasefire proposal has heightened concerns that tensions in West Asia could persist for longer than anticipated, reducing the likelihood of a near-term diplomatic resolution and increasing the risk of prolonged supply-side disruptions and higher commodity prices."

Nair added, "While rising US bond yields are narrowing the India-US yield spread, potentially leading to foreign fund outflows and keeping market sentiment cautious. Selling pressure remained broad-based across sectors as investors reassessed risk amid growing expectations of another Fed rate hike. In addition, market participants are likely to remain cautious ahead of the upcoming RBI policy decision, with global liquidity conditions, bond yield movements, oil prices, and policy signals expected to drive sentiment in the near term."

Ankur Punj, Managing Director at Equirus Wealth, said, "As the geopolitical situation turned bleak amid the escalating US-Iran conflict, global crude oil prices jumped sharply, triggering a broader sell-off in domestic equity markets. With US bond yields already scaling above 5 per cent and markets seeing little respite from overseas fund outflows, the undertone is likely to remain cautious with a negative bias in the near to medium term."

Echoing a similar view, Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said Indian equities recorded a broad-based sell-off after renewed US-Iran tensions pushed Brent crude higher.

Banks emerged as a key drag on the domestic market, with heavyweight private and public-sector lenders declining, while weakness extended across major sectors, Radhakrishnan added.

Nifty outlook

Rupak De, Senior Technical Analyst at LKP Securities, said, "Bears continued to strengthen as the selling pressure intensified, dragging Nifty decisively below the 23,000 mark. The index extended its decline below the recent swing low, reinforcing the prevailing bearish structure. Sentiment remains extremely weak. On the downside, immediate support is placed at 22,650–22,700, below which further correction could extend in the short term. On the higher end, 23,000 is likely to act as a strong resistance and may prove difficult to reclaim."