Sensex drops 553 points as rising oil prices batter Indian markets

Indian stock markets opened sharply lower on Monday, with the Sensex plunging 553 points in early trade as a fresh spike in global crude oil prices dented investor confidence across the board.

The trigger was a renewed flare-up in US-Iran tensions, which sent oil prices rallying and revived fears of a sustained energy price shock. For India — which imports the vast majority of its crude — higher oil prices translate almost directly into a wider trade deficit, rupee pressure and the risk of fuel-price hikes that can fan broader inflation.

Market participants turned cautious almost immediately at the open, with selling pressure concentrated in oil-sensitive sectors including aviation, paint, tyre and fast-moving consumer goods companies, all of which face higher input costs when crude rises. Financial stocks also came under pressure as traders priced in the risk of tighter monetary conditions if inflation accelerates.

The day's selloff underscored how deeply exposed Indian markets remain to geopolitical events in the Middle East. With the Strait of Hormuz already a flashpoint — through which a significant share of India's oil imports transit — any escalation in the region has an outsized impact on the domestic economy and financial markets. Analysts said the outlook would depend heavily on whether the US-Iran standoff de-escalates or deepens in the coming days.