Indian Equities Slide as Middle East Tensions and US Pharma Tariffs Weigh
Indian benchmark indices fell sharply as escalating Middle East shipping disruptions drove crude prices above $92 a barrel, while new US tariff threats on generic medicines pressured pharmaceutical stocks.
Indian benchmark indices suffered significant losses, with the Sensex tumbling over 700 points to an intraday low of 76,731. The Nifty 50 concurrently declined by more than 200 points, slipping below the 24,000 threshold amid dual macroeconomic and sector-specific pressures.
Escalating Middle East conflicts served as the primary catalyst for the broader market retreat. Three oil tankers transporting Saudi crude to Asia reversed course in the Red Sea following threats from Yemen’s Iran-aligned Houthis. Coupled with Iranian threats to the Strait of Hormuz, these disruptions pushed Brent crude prices above $92 per barrel, spooking investors concerned about inflation and energy costs.
Pharmaceutical stocks emerged as notable laggards following the unveiling of a phased tariff plan on imported generic medicines by US President Donald Trump. Although the plan grants drugmakers a two-year reprieve before steeper duties take effect, the announcement triggered immediate sell-offs. Sun Pharma shares led the decline on the Sensex, dropping between 2 and 3 percent.
The negative sentiment extended across major sectors, with technology and financial stocks bearing the brunt of the selloff. Tech Mahindra and Infosys fell more than 1 percent each, while major lenders including SBI, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, alongside IT giants TCS and HCL Tech, dropped nearly 1 percent. Broader markets also weakened, with the Nifty Smallcap 100 and Nifty Midcap 100 indices falling up to 0.5 percent.
Market breadth reflected the widespread caution, as the National Stock Exchange recorded 1,496 declining stocks against 906 advancers, with 102 issues remaining unchanged. A few consumer and automotive names, including Maruti Suzuki, Titan, Hindustan Unilever, Asian Paints, Eternal, M&M, and Bajaj Finance, managed marginal gains to buck the prevailing trend.
Despite the immediate headwinds, strategists see underlying resilience in the Indian market. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that while the US-Iran conflict and rising crude prices will weigh on sentiment, domestic fundamentals remain supportive. He pointed to impressive early automobile first-quarter numbers, strong export performance, and an apparent end to the price correction in leading banking stocks.
Vijayakumar also highlighted currency stability, driven by foreign currency non-resident deposit flows that have now crossed $20 billion. Furthermore, weakening global chip trade and sharp corrections in markets like South Korea are enhancing India’s relative valuation appeal, prompting foreign portfolio investors to selectively buy on market dips.
From a technical perspective, Anand James, Chief Market Strategist at Geojit Investments, advised a cautious but constructive approach. He observed that the Nifty’s attempts to push above 24,220 were lukewarm, yet a collapse remains unlikely as momentum indicators appear weak. James maintains a preference for buying on dips, provided the index does not breach the 24,099 support level.
