Indian Equities Fall as Oil Surge and US Tariffs Weigh on Sentiment

Indian benchmark indices experienced a broad-based selloff on Friday, with the Sensex plunging nearly 900 points to an intraday low of 75,514. The Nifty 50 mirrored the decline, shedding over 250 points to touch 23,613, dragging midcap and smallcap indices down by more than 1 percent each.

The sharp reversal erased approximately ₹6 lakh crore in investor wealth. Consequently, the total market capitalisation of BSE-listed firms dropped to ₹471 lakh crore from ₹477 lakh crore in the previous session.

Market sentiment is being heavily pressured by a relentless rally in crude oil. Brent crude futures touched $101 per barrel, marking a 40 percent gain in July alone following two consecutive weeks of double-digit percentage increases.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed to geopolitical friction as the primary catalyst. "The attack on Saudi tankers by the Iran-backed Houthis in the Red Sea is the main reason for the recent sharp spike in Brent crude to about $100," he said, adding that such levels will revive India’s balance of payments concerns.

These energy market jitters are compounded by escalating US-Iran tensions. Following 13 consecutive nights of American strikes, reports indicate the US administration is weighing further major military operations in the region.

Concurrently, rising US bond yields are aggravating the risk of foreign capital outflows from emerging markets. The benchmark US 10-year bond yield has climbed 6.5 percent this month to reach 4.711 percent, prompting investors to rotate into safer debt instruments.

"The spike in the US 10-year yield to 4.7% is negative for equity markets globally," Vijayakumar noted, identifying it as a distinct near-term risk for risk assets.

Trade policy uncertainty has also returned to the forefront. The US administration recently imposed tariffs ranging from 25 percent on Brazil to 50 percent on Canada, alongside levies of up to 200 percent on generic drugs.

Under Section 301, India was placed in the lower 10 percent tariff category among 60 affected trading partners. This reinforces concerns that protectionist measures will weigh on global growth and sustain higher interest rates.

Technically, the Nifty remains under pressure while trading below the 24,000 threshold. Shrikant Chouhan, head of equity research at Kotak Securities, warned that a weak market structure will persist as long as this level holds as resistance.

Chouhan projects a potential slide toward the 23,650 to 23,550 range. Bajaj Broking echoed this cautious outlook, stating that a breach below 23,800 could accelerate the decline toward 23,500, aligning with key trendline supports from April and June 2026.