Markets Extend Losses As West Asia Tensions, FII Outflows Weigh On Sentiment

Indian benchmark indices ended sharply lower on Monday as escalating geopolitical tensions in West Asia, rising crude oil prices and continued foreign investor selling triggered broad-based weakness across sectors.

The BSE Sensex fell 719.08 points, or 0.97%, to close at 73,524.26, while the NSE Nifty50 declined 243.70 points, or 1.04%, to settle at 23,123.

Broader markets witnessed even steeper declines, reflecting a risk-off mood among investors. The Nifty Midcap 100 index dropped 1.4%, while the Nifty Smallcap 100 index lost 1.9%.

All major sectoral indices ended in negative territory. Realty and Metal stocks led the decline, falling more than 2% each. Selling pressure was also visible across Auto, Consumer Durables, Information Technology, Media, Infrastructure, Power, Energy and Oil & Gas counters, all of which declined more than 1%.

Among Nifty constituents, Wipro, Jio Financial Services, Eternal, Hindalco Industries and Shriram Finance emerged as the biggest losers. In contrast, Max Healthcare, Power Grid Corporation, Bharat Electronics, Tech Mahindra and Nestlé India managed to close in positive territory.

Crude Oil Surge, Weak Global Markets Weigh

Investor sentiment remained fragile after renewed hostilities in West Asia heightened concerns over global energy supplies and inflation.

Brent crude continued to trade near the $100-per-barrel mark, raising fears of a higher import bill for India and renewed inflationary pressures. The escalation came amid reports of fresh attacks involving Israel and Iran, increasing concerns over stability in the region and the potential impact on oil shipments.

Global markets also remained under pressure. South Korea's Kospi, Japan's Nikkei 225, China's Shanghai Composite and Hong Kong's Hang Seng all closed sharply lower. The weakness followed a steep selloff on Wall Street on Friday, where the Nasdaq Composite plunged 4.18%, the S&P 500 declined 2.64% and the Dow Jones Industrial Average fell 1.35%.

Vinod Nair, Head of Research at Geojit Investments, said concerns over rising crude prices and weakness in global technology stocks weighed on sentiment.

"Global sentiment has weakened amid a flare-up of tensions in the Middle East, pushing crude towards $100 per barrel. Simultaneously, global technology stocks have witnessed a sell-off as investors begin to question the sustainability of the AI-led rally," he said.

Nair added that while semiconductor-heavy indices have started showing signs of valuation fatigue, it is still premature to conclude that the broader AI-driven rally has reversed.

Foreign Selling Continues

Foreign investor selling remained another major overhang for domestic equities.

Foreign Institutional Investors (FIIs) sold equities worth ₹8,776 crore on Friday. According to NSDL data, overseas investors have withdrawn nearly ₹43,000 crore from Indian equities during the first week of June alone.

Total FPI outflows from Indian equities have reached ₹2.67 lakh crore in 2026 so far, surpassing the ₹1.66 lakh crore withdrawn during the entire 2025 calendar year.

Market participants said the combination of global uncertainty, attractive opportunities in AI-linked overseas markets and concerns around India's macroeconomic outlook has continued to keep foreign investors on the sidelines.

Rupee Weakens

The Indian rupee also came under pressure, weakening by 38 paise against the US dollar to close at 95.32 compared with Friday's close of 94.94.

Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said higher crude oil prices and persistent foreign outflows remained key factors weighing on the currency.

"The combination of rising crude prices, continued FII outflows and risk-off sentiment in global markets kept pressure on the rupee despite RBI efforts to maintain orderly market conditions," he said.

According to Trivedi, the rupee is likely to remain volatile in the near term, with crude oil movements and geopolitical developments continuing to dictate market direction.

Stock-Specific Action

Among individual stocks, InterGlobe Aviation fell 2.8% after a Bloomberg report indicated that the airline may not receive all nine Airbus A321XLR aircraft scheduled for delivery this year due to supply chain disruptions linked to the Iran conflict.

On the positive side, EMS surged more than 14% after securing an order worth ₹103 crore, while Creative Newtech gained on fresh business developments. Alembic Pharmaceuticals also advanced after announcing plans to acquire a 45% stake in a newly incorporated Canadian company.

Market breadth remained mixed despite the overall decline. More than 140 stocks touched fresh 52-week highs, including Aster DM Healthcare, Adani Energy Solutions, Krishna Institute of Medical Sciences, ACME Solar Holdings, Federal Bank, JK Bank, Sai Life Sciences, Laurus Labs and Ather Energy.

At the same time, over 100 stocks hit their 52-week lows, including Wipro, Swiggy, Rail Vikas Nigam, TCS, SBI Cards, Reliance Industries, Blue Dart and Dalmia Bharat.

Technical Outlook Remains Weak

Technical analysts believe the market remains vulnerable in the near term.

Nilesh Jain, VP and Head of Technical and Derivative Research at Centrum Finverse, said the Nifty continues to exhibit a weak structure despite attempts at recovery during the session.

"The broader market structure remains weak, with the MACD maintaining a bearish crossover and the RSI trending lower. The index is also trading below its short- and long-term moving averages, indicating a negative bias," he said.

According to Jain, immediate support for the Nifty is placed near 23,000, and a breach below that level could trigger further downside towards 22,700. On the upside, sustained trading above 23,500 may lead to a short-covering rally.

Meanwhile, Vatsal Bhuva, Technical Analyst at LKP Securities, said Bank Nifty remains trapped in a consolidation range with resistance around 54,500-54,800 and support near 53,500-53,600, suggesting a level-based trading approach until a decisive breakout emerges.