Indian equities fell sharply on Friday as renewed Middle East tensions and a fresh leg higher in crude oil rattled investors. The BSE Sensex closed 439 points lower at 79,860 and the broader NSE Nifty 50 ended at 24,195, with banking and automobile stocks taking the steepest losses of the session.
The drop followed the overnight clash between United States Navy destroyers and Iranian forces in the Strait of Hormuz and the early-morning missile and drone attack on the United Arab Emirates. Brent crude rose to $100.45 a barrel before settling near $100, an unwelcome backdrop for an economy that imports more than eighty per cent of its oil.
Bank Nifty was the day's worst-performing index, down 1.7 per cent, as a rise in oil prices revived concerns that the Reserve Bank of India would have to delay further rate cuts. State Bank of India fell 2.4 per cent and ICICI Bank 1.9 per cent. Auto names were dragged by Tata Motors, off 3.1 per cent, and by a 1.8 per cent fall in Maruti Suzuki.
The rupee weakened past 86.20 to the dollar, its softest level since February. Currency dealers reported intervention in the spot market by state-owned banks, suggesting the Reserve Bank had stepped in to slow the descent.
Information technology shares were the only major sector to close higher, lifted by the rupee's slide and by an upbeat note from Morgan Stanley on Indian outsourcing margins. Infosys rose 1.2 per cent and Wipro 0.9 per cent.
Brokerages were reluctant to call a near-term floor. Kotak Institutional Equities said the combination of higher oil and a softer currency could trim 30 to 40 basis points from corporate margins in the June quarter, and warned that a sustained Brent print above $105 would force a reset of full-year earnings forecasts.