Sensex and Nifty fell as West Asia tensions hurt sentiment.
Crude oil surged above $96, raising inflation and growth concerns.
IT, financial and metal stocks led the broad-based market selloff.
Indian benchmark indices opened sharply lower on Monday, mirroring weakness across global markets as escalating tensions in West Asia, rising crude oil prices and concerns over higher US interest rates weighed on investor sentiment.
The NSE Nifty50 fell as much as 1.22% to 23,080.70 in early trade, while the BSE Sensex dropped 1.11% to 73,421.61. By 10 am, the Nifty had recovered some losses but was still down 200 points, or 0.91%, at 23,156, while the Sensex was lower by 638 points, or 0.90%, at 73,576.
1 June 2026
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Selling pressure was broad-based, with all 16 major sectoral indices trading in the red. High-weightage sectors such as financial services and information technology emerged as the biggest drags, falling 1.3% and 1.5%, respectively.
Broader markets also remained under pressure, with the Nifty Midcap 100, Midcap 150 and Smallcap indices declining around 1% each, reflecting weakness across market segments.
Crude Oil Jumps Amid West Asia Conflict
Investor sentiment deteriorated after Iran reportedly launched missiles towards Israel following Israeli military action in Beirut, raising fears of a broader regional conflict and potential disruptions to global oil supplies.
Brent crude futures surged 3.5% to $96.5 per barrel, extending gains as traders assessed the possibility of supply disruptions through the Strait of Hormuz, a critical route for global energy shipments.
The spike in crude prices is particularly concerning for India, one of the world's largest oil importers, as higher energy costs can fuel inflation, widen the current account deficit and put additional pressure on corporate earnings.
Although US President Donald Trump said a diplomatic agreement remained achievable and reportedly urged Israeli leaders to avoid further escalation, markets remained sceptical about an immediate resolution.
Global Markets Witness Sharp Selloff
The domestic market weakness also mirrored a sharp decline across international equities.
The MSCI Asia ex-Japan index tumbled 2.7%, while South Korea's Kospi plunged 4.8% and Japan's Nikkei fell 3.8%. Technology stocks led the global selloff after recent gains linked to artificial intelligence enthusiasm began to unwind.
Market sentiment was further dented after stronger-than-expected US employment data increased expectations that the US Federal Reserve may keep interest rates elevated for longer.
According to CME FedWatch data, the probability of a US rate hike by the end of 2026 has risen to 72.3% from 45.2% a week earlier. Higher US interest rates typically reduce the attractiveness of emerging markets by encouraging capital flows towards developed economies offering higher yields.
IT, Metal And Financial Stocks Drag
Among Nifty50 constituents, Wipro, TCS, Hindalco Industries, Tata Steel, JSW Steel, Bajaj Finance and Shriram Finance were among the major losers in early trade.
The weakness in IT shares followed a sharp correction in global technology stocks, while metal stocks came under pressure due to concerns over global growth and risk appetite.
Financial stocks also remained weak as investors reduced exposure to risk-sensitive sectors amid heightened uncertainty.
Meanwhile, market volatility surged sharply. India VIX, often referred to as the fear gauge, jumped nearly 15% to around 18, indicating rising nervousness among traders.
Technical Indicators Remain Weak
Analysts noted that the broader technical structure remains fragile, with the Nifty continuing to trade below key moving averages and maintaining a lower high-lower low pattern.
Immediate support is seen in the 23,100-23,000 zone, while resistance is clustered around 23,500-23,700 levels. A decisive move beyond either range is likely to determine the market's next directional trend.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said several global factors have created strong headwinds for equities.
"There are strong headwinds for the market as trading begins for the week. The sharp cut of 4.18% in Nasdaq last Friday has rattled global markets with tech-dominated South Korea and Taiwan facing big sell-off. The escalation of conflict in West Asia has hardened crude prices, with Brent moving above $96," he said.
However, Vijayakumar believes the Indian market could display resilience despite the weak opening.
"If the market opens with a deep cut, there is likely to be a strong recovery on DII and retail buying. The selloff in the US was largely a tech-led correction, which could trigger a rotation away from AI-linked trades towards other markets, potentially benefiting India," he added.
He also highlighted that the appreciation of the rupee from its recent low of 96.96 to 94.94, stronger-than-expected GDP growth of 7.7% for FY26 and better-than-anticipated fourth-quarter earnings could provide fundamental support to the market in the near term.
