The Indian equity market’s week-long rally fizzled out on Thursday as a mix of global geopolitical tensions, renewed concerns over global trade disruptions, and weak global cues triggered a broad-based selloff.

The benchmark Nifty50 closed down 253.20 points, or 1.01 per cent, at 24,888.20 — after enjoying a week surpassing the psychologically crucial 25,000 mark. The 30-stock Sensex ended 823.04 points lower at 81,691.98 points, after falling as much as 991.98 points or 1.20 per cent during the day.

Broader Weakness

The broader markets fared worse, with the Nifty Midcap 100 and Smallcap 100 down 1.6 per cent and 1.8 per cent, respectively. Volatility also spiked, with India VIX climbing 3.5 per cent to 14.15 on increased hedging activity and expectations of near-term volatility. Almost all sectoral indices ended in the red, with the Nifty Realty and banking indices slipping around 2 per cent.

The rising tensions in West Asia, and the US President Trump threatening to impose unilateral tariffs in two weeks has spooked investors across the globe, including back home. Reports of Israel preparing to target Iran’s nuclear facilities, and retaliatory threats from Tehran, unnerved investors already grappling with elevated oil prices and inflation fears, said analysts.

“Uncertainty surrounding retaliatory responses from China and other major economies has triggered volatility across Asian and US markets, with spillover effects dragging down Indian equities,” said Vishnu Kant Upadhyay, AVP – Research & Advisory at Master Capital Services. “On the domestic front, the weekly F&O expiry on Thursday also intensified intraday volatility, as traders aggressively unwound positions amid the uncertain global backdrop,” Upadhyay said.

Brent crude surged over 4 per cent overnight amid growing US-Iran tensions, dragging down shares of oil marketing companies and raising concerns over India’s import bill. Shares of technology, metal and automobile companies also underperformed.

“Valuation concerns and rising oil prices, driven by Middle East tensions, are fuelling risk aversion among investors. Consolidation in domestic markets is evolving into a broad-based trend, now extending to large-cap stocks as well,” Vinod Nair, head of research at Geojit Investments, said.

Pranay Aggarwal, CEO of Stoxkart, said, “Weak global cues, particularly concerns around sticky US inflation and potential delays in Fed rate cuts, have weighed heavily on investor sentiment.”

While domestic data offered some relief, with India’s retail inflation in May cooling to 2.82 per cent, the lowest in six years, investors booked profits due to global risk factors. Foreign investors were net sellers to the tune of ₹3,831.42 crore, according to Thursday’s provisional data.

Going ahead, analysts expect the market to remain in consolidation mode with investors cautiously tracking global cues, developments on the US-India trade deal, and domestic macroeconomic data.

Published on June 12, 2025