Nifty drops below 23,800 as Red Sea attacks spike oil prices
Indian equities closed lower after Houthi attacks on Saudi tankers pushed Brent crude above $100, compounding investor fears driven by a weakening rupee and rising US Treasury yields.
Indian equities closed sharply lower on Friday as escalating military conflicts in the Middle East disrupted global energy markets. The NSE Nifty fell 102.15 points, or 0.4%, to close at 23,767.45, slipping beneath the closely watched 23,800 threshold. The BSE Sensex declined 331.6 points, also representing a 0.4% drop, to end the session at 76,059.77.
Both major indices experienced significantly steeper losses during the trading day, having declined as much as 1.2% before staging a partial recovery in the final hours. The initial sell-off was triggered by a sudden surge in crude oil prices. Brent crude September futures were trading at $97.5 a barrel on Friday.
Earlier in the session, Brent prices had climbed above $100 for the first time since May. The catalyst for this spike was a specific military escalation in the Red Sea. Yemen's Houthi movement, which is backed by Iran, claimed that its forces attacked two Saudi oil tankers.
This development occurred simultaneously with the US carrying out additional strikes on Iran. The intersection of these events revived immediate concerns about potential disruptions to critical energy supply routes. The spike in oil prices collided with existing domestic financial pressures.
"A combination of global and domestic factors, including the spike in crude oil prices and the continued depreciation of the Indian rupee, has weighed on market sentiment," said Shrikant Chouhan, head of equity research, Kotak Securities. He highlighted that the rising cost of energy was not the only headwind dampening the mood on the trading floor.
"Also, the rise in the US 10-year Treasury yield to 4.71%, its highest level in several months, has added to investor concerns," he said. This sharp increase in long-term borrowing costs arrived just as the Indian rupee continued its steady depreciation.
The market's growing anxiety was quantified by a notable rise in the Nifty's Volatility Index, commonly known as the VIX. This fear gauge went up by 4.1% to 14.03 levels, signaling that traders are actively pricing in larger price swings. For market professionals, the convergence of these distinct factors points to a period of heightened caution.
