Sensex Drops 300 Points As Iran War Fuels Crude Concerns; India VIX Jumps 2%

Indian benchmark indices started the week on a subdued note on Monday, extending the cautious sentiment seen last week as elevated crude oil prices and continued geopolitical uncertainty surrounding the Iran war weighed on investor sentiment.

At around 9:45 am, the BSE Sensex was down around 300 points, or 0.39%, at 77,706.11, while the Nifty 50 declined 62.60 points, or 0.26%, to 24,303.40.

The weakness came as Brent crude remained close to the $90-a-barrel mark, with investors assessing the potential impact of prolonged geopolitical tensions on oil prices and the broader market.

Crude Oil Near $89

Brent crude hovered around $89 per barrel, gaining about 0.5% during the day, amid a lack of progress towards ending the Iran war.

Iran on Saturday called on the US to accept defeat, while US President Donald Trump described Tehran as "very evil" and told Americans to prepare for continued high fuel prices as a consequence of the war.

Elevated crude oil prices remain a key headwind for domestic equities, particularly as investors wait for signs of a resolution to the geopolitical crisis.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said crude trading around $89 without prospects of an immediate resolution to the crisis could cap any upside in the domestic market.

Global Cues Mixed, India VIX Rises

Global market cues remained mixed at the beginning of the week. MSCI's broadest index of Asia-Pacific shares outside Japan traded flat, while Japan's Nikkei 225 edged 0.4% higher.

Australia's benchmark declined 0.3%, while South Korean markets remained closed for a public holiday.

US equity futures were mildly positive, with S&P 500 futures gaining 0.1% and Nasdaq futures advancing 0.2%. EURO STOXX 50 futures were up 0.2%.

Meanwhile, the India VIX rose more than 2% to 11.54, signalling an increase in expected market volatility and investor uncertainty.

Nifty Could Remain In 24,000-24,600 Range

Vijayakumar expects the Nifty to remain within the 24,000-24,600 range in the near term until fresh triggers emerge.

He said weak performances from large IT companies and major banking stocks have been weighing on the benchmark, while stock-specific opportunities could continue to emerge outside the Nifty 50.

According to Vijayakumar, the Q1 earnings season showed significant outperformance by the broader market, which could continue through the rest of the year. He highlighted shifts within sectors, with CDMO, hospitals and diagnostics companies outperforming traditional large pharmaceutical companies, discretionary consumption outperforming conventional FMCG players, and midcap IT companies performing better than their large-cap counterparts.

The broader takeaway from the Q1 earnings season, he added, is that an earnings recovery is underway, which could provide resilience to domestic equities despite external headwinds such as elevated crude oil prices.