Sensex and Nifty plunged over 2% as rising crude oil prices and US-Iran tensions triggered a broad market selloff.
Investor wealth fell by nearly ₹10 lakh crore, with all sectoral indices ending in the red.
Markets will track Q1 earnings, the Fed's policy decision and Middle East developments for further direction.
Indian benchmark indices suffered their steepest decline in weeks on Wednesday, with the Sensex plunging 1,677 points and the Nifty slipping below the 23,900 mark as surging crude oil prices, escalating tensions in the Middle East and weak global cues sparked a broad-based selloff across sectors.
The Sensex ended 1,677.12 points, or 2.15%, lower at 76,503.60, while the Nifty 50 dropped 516.65 points, or 2.12%, to close at 23,882.05.
1 June 2026
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The selloff intensified during the second half of the session after US President Donald Trump declared that the interim agreement with Iran was "over", reviving fears of a prolonged conflict in the Middle East and its impact on global energy supplies.
During the day, the Sensex tumbled as much as 1,914 points to an intraday low of 76,266, while the Nifty fell 581 points, breaching the psychologically important 23,900 level.
The sharp decline wiped out nearly ₹10 lakh crore in investor wealth, with the combined market capitalisation of BSE-listed companies falling to around ₹470 lakh crore.
All 30 Sensex constituents ended in the red. Hindustan Unilever, InterGlobe Aviation, Maruti Suzuki, Kotak Mahindra Bank, Bharat Electronics and Bharti Airtel declined between 2% and 4%.
Broader markets also witnessed heavy selling, with the Nifty Midcap 100 and Nifty Smallcap 100 indices falling around 2%.
All sectoral indices closed lower. Nifty Bank, FMCG and Oil & Gas declined more than 2%, reflecting widespread risk aversion across the market.
Trump's Iran Remarks, Crude Oil Spike Trigger Risk-Off Sentiment
Investor sentiment deteriorated after Trump said the memorandum of understanding with Iran was "over" following renewed hostilities in the Gulf.
The remarks came after the US launched fresh strikes against Iran in response to attacks on commercial vessels passing through the Strait of Hormuz, while sanctions on Iranian crude exports were also reinstated.
The renewed conflict heightened concerns over disruptions to oil supplies through one of the world's most critical shipping routes.
Brent crude futures surged nearly 5% to around $78 per barrel, while WTI crude climbed to about $74, raising fears of higher inflation and increased import costs for oil-dependent economies such as India.
The spike in oil prices also weighed on the rupee, which weakened 0.6% to 95.53 against the US dollar after breaching the 95.30 level.
Global Weakness And Rising Bond Yields Add Pressure
Weak global cues further amplified the selloff. European markets declined sharply, with the UK's FTSE 100, Germany's DAX and France's CAC 40 falling up to 2%. In Asia, Japan's Nikkei lost 1.5%, while South Korea's Kospi plunged around 6% amid continued weakness in technology stocks.
US futures also pointed to another weak session on Wall Street, with Dow Jones futures trading about 1% lower.
Meanwhile, US Treasury yields moved higher, with the benchmark 10-year yield rising to 4.565% and the 30-year yield crossing 5%, reducing the relative attractiveness of equities.
Volatility Spikes As Investors Await Earnings, Fed Decision
Market volatility surged during the session, with India VIX jumping 27% to 14.85, signalling heightened investor anxiety.
Vinod Nair, Head of Research at Geojit Investments, said renewed geopolitical tensions and rising crude oil prices reversed the positive momentum that domestic markets had built over recent sessions.
He noted that higher crude prices have revived inflation concerns and pushed bond yields higher both in India and the US, triggering a macro-driven flight from risk. According to Nair, the sharp rise in India VIX reflected growing nervousness among investors ahead of the first-quarter earnings season.
While Q1FY27 earnings may not be a major trigger by themselves, he said management commentary and forward guidance will be closely watched to assess whether earnings weakness extends into the second quarter, potentially delaying the broader recovery in corporate profits.
Nair added that market direction in the coming weeks will depend largely on the outcome of the US Federal Reserve's July policy meeting, developments surrounding the expiry of the US reciprocal tariff truce, and the trajectory of geopolitical tensions in the Middle East.
