Indian equities drop as Strait of Hormuz standoff spikes oil
Escalating US-Iran hostilities and a new transit fee on the Strait of Hormuz drove crude prices up nearly 10%, pushing Indian equities lower as investors priced in prolonged inflation and higher interest rates.
Indian benchmark indices fell more than 0.6% on Tuesday as a sharp escalation in Middle East hostilities sent crude oil prices surging. The Nifty 50 and Sensex closed in negative territory, mirroring broad losses across the market.
The selloff was triggered by intensified military strikes between the US and Iran, shifting the conflict's focus to the Strait of Hormuz. US President Donald Trump announced a 20% fee on all cargo passing through the waterway and reimposed a blockade on Iranian ports. Because the strait handles roughly one-fifth of global crude and liquefied natural gas trade, the geopolitical shock pushed oil prices nearly 10% higher overnight to a four-week peak.
For India, a major oil importer, the energy spike threatens to worsen inflation just as domestic price pressures accelerated in June. Investors responded by abandoning rate-sensitive sectors, reinforcing expectations that central bank interest rates will remain elevated for an extended period.
This risk-off sentiment punished realty, public sector banking, and auto stocks, which all dropped more than 1%. HCL Technologies slid 4.6% to ₹1,164 despite reporting in-line quarterly results, leading a broader technology selloff that included Birlasoft, KPIT Technologies, and Tata Elxsi. Tyre manufacturers CEAT and Apollo Tyres fell 4% and 3.35% respectively as higher oil costs threatened margins.
Aegis Vopak Terminals tumbled 7.3% to ₹280, while Newgen Software Technologies dropped 6% as investors locked in profits following a 29% three-day rally. Lenders also faced heavy selling, with CreditAccess Grameen, Can Fin Homes, and Shriram Finance among a basket of financial stocks declining between 2% and 4.6%. Food delivery platform Swiggy extended its losing streak, falling 3% to ₹258.80.
A handful of sectors bucked the downtrend. Pharma gained 1% and metals rose 0.6%. Nuvoco Vistas Corporation surged 7.9% to ₹341 after posting strong quarterly earnings. Biocon climbed 6.4% on a large block deal, and CarTrade Tech advanced 3.4% to a record close of ₹2,895. Select Adani Group stocks outperformed, led by a 5% rally in Adani Power.
