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Indian equity markets opened sharply lower on Wednesday as a renewed surge in crude oil prices and escalating tensions in the Middle East weighed on investor sentiment. The rise in oil prices has raised concerns over inflation, the trade deficit and economic growth, particularly for India, one of the world’s largest crude oil importers.

The Sensex fell around 470 points in early trade, while the Nifty 50 declined over 100 points, extending losses for the second consecutive session. The benchmark indices had already ended lower on Tuesday, with the Sensex falling 555.23 points, or 0.73%, to 75,577.58, while the Nifty slipped 144.05 points, or 0.61%, to 23,635.10.

Crude oil prices near $100

The biggest concern for domestic markets remained the sharp rise in crude oil prices. Brent crude climbed to around $99.5 per barrel, while West Texas Intermediate (WTI) crude moved above $94 per barrel. Oil prices have risen for the fourth consecutive session as renewed fighting involving the US, Iran and other regional actors has increased fears of disruptions to energy supplies.

The latest escalation includes US strikes on Iranian oil tankers, Iranian attacks on US military assets and attacks by Iran-backed Houthis on Saudi targets. Investors are particularly concerned about potential disruptions to oil infrastructure and shipping routes in the region, including the strategically important Strait of Hormuz.

IT stocks under pressure

Technology stocks were among the major laggards in early trade. The Nifty IT index declined sharply, with stocks such as HCL Technologies, Tech Mahindra and Infosys coming under pressure. Coforge also fell significantly following the resignation of its chairman Om Prakash Bhatt.

The broader market also remained weak, with mid-cap and small-cap indices trading in negative territory as investors turned cautious amid heightened geopolitical uncertainty.

Rupee and inflation concerns

Higher crude prices are particularly negative for India because the country relies heavily on imports to meet its oil requirements. A sustained rise in crude can increase the country’s import bill, widen the trade deficit and put additional pressure on the Indian rupee.

The rupee was trading near ₹94.82 against the US dollar, adding to concerns among investors.

A prolonged oil rally could also complicate the inflation outlook by raising fuel and transportation costs and potentially affecting the broader cost of goods and services.

Investors remain cautious

Foreign investors have also remained cautious. On Tuesday, foreign institutional investors sold Indian equities worth around ₹123 crore, while domestic institutional investors provided some support with purchases of approximately ₹1,350 crore.

With crude oil approaching the psychologically important $100-a-barrel mark, investors are expected to closely track developments in the Middle East, global bond yields, currency movements and foreign fund flows.

For Dalal Street, the immediate outlook remains closely tied to the direction of crude prices. Any further escalation in the Middle East could keep volatility elevated and put additional pressure on Indian equities.