Sensex Falls 295 Points, Nifty Slips As Crude Crosses $91 Amid Iran Tensions

Indian equity benchmark indices traded lower on Tuesday as the temporary US-Iran ceasefire expired and hopes of a broader agreement faded, pushing oil prices above $91 a barrel and raising concerns over the impact of higher energy costs on inflation and markets.

At around 9:35 a.m., the Sensex was down 294.95 points, or 0.38%, at 77,433.21, while the Nifty declined 63.35 points, or 0.26%, to 24,224.30.

The decline came as investors assessed the implications of renewed tensions between Iran and the US, with the prospect of sustained higher crude prices emerging as a key concern for India, the world's third-largest oil importer.

Crude Oil Crosses $91

Oil prices rose on Tuesday as hopes of a deal to end the Middle East war appeared to recede, with Iran indicating that it could adopt a more offensive military posture and the US ruling out an extension of the temporary ceasefire agreement.

According to Reuters, Iran will shift to a "fully offensive" military posture as efforts to negotiate a permanent end to the war with the US have stalled. Washington, meanwhile, has ruled out extending the temporary ceasefire arrangement.

Progress towards peace talks and a resumption of oil tanker traffic through the strategic Strait of Hormuz has also stalled, raising concerns over the possibility of prolonged disruptions to energy supplies, Reuters reported.

Brent crude futures climbed 27 cents, or 0.3%, to $91.14 a barrel, after rising to their highest level since July 30 on Monday. US West Texas Intermediate crude futures rose 42 cents to $85.04 a barrel, after gaining more than 1% earlier in the session to touch $85.37, their highest level since July 31.

The prospect of elevated crude prices is particularly important for Indian markets as higher energy costs can add to inflationary pressures.

Asian Markets Mixed, FII Selling Adds Pressure

Global cues also remained weak. Japan's benchmark Nikkei 225 declined 1.6% to 68,098.54, while Australia's S&P/ASX 200 edged 0.2% higher to 9,088.60.

South Korea's Kospi reversed course after rising sharply earlier and fell 0.6% to 6,933.60. Hong Kong's Hang Seng declined 0.6% to 25,289.88, while the Shanghai Composite fell 0.5% to 3,963.53.

Foreign institutional investors also remained sellers in Indian equities. FIIs offloaded ₹2,535 crore worth of Indian equities on Monday, adding to concerns over foreign flows at a time when crude prices and global bond yields are rising.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said two developments were likely to influence the market in the near term - Brent crude rising above $91 amid escalating tensions between Iran and the US, and the US 10-year bond yield climbing to 4.73%.

He said the higher US bond yield could weigh on FII inflows, which had turned positive in July and August so far.

However, Vijayakumar said the resilient Indian economy and clear signs of a turnaround in earnings growth remain important tailwinds for the market. He added that domestic institutional investors, supported by strong liquidity, could provide buying support during significant market declines.

"Retail investors can use the dips in the market to slowly accumulate high quality stocks for the long-term," Vijayakumar said, while cautioning that heightened uncertainty could keep markets volatile.