Indian equities extended losses on Wednesday as investors reacted to rising tensions in West Asia, while the rupee slid to a record low amid a spike in global crude oil prices.
The benchmark BSE Sensex was down over 1,600 points, or around 2%, at 10 a.m., while the NSE Nifty 50 fell about 2% to trade below the 24,350 level. Markets had plunged on Monday in their first session after the conflict escalated and were shut on Tuesday for Holi.
The India VIX, a gauge of market volatility, surged more than 20% in morning trade, reflecting heightened investor nervousness.
The rupee weakened to 92.1 per U.S. dollar, its lowest level on record, pressured by concerns that higher crude prices could widen India’s current account deficit and fuel domestic inflation. The currency had declined roughly 0.7% from its previous close.
Brent crude futures climbed to around $82 a barrel on Wednesday, up from about $73 on Friday before hostilities intensified.
The recent escalation followed a joint military operation by the United States and Israel targeting Iran, amid longstanding tensions over Tehran’s nuclear programme. Iran has denied seeking nuclear weapons and says its programme is for civilian purposes.
Subsequent retaliatory strikes and threats to shipping through the Strait of Hormuz have heightened fears of supply disruptions. The narrow passage, which links the Gulf to the Arabian Sea, handles a significant share of global oil trade and is critical for India, which imports the bulk of its crude requirements.
Analysts said sustained high oil prices could put pressure on India’s inflation outlook and fiscal position, keeping domestic markets volatile in the near term.