India’s BSE Sensex fell around 0.8% to 76,339 on Wednesday, its lowest close since July 24, as escalating US-Iran tensions drove oil prices higher and sparked a broad-based selloff. Brent crude gained about 1% to $95.40 a barrel after briefly touching a near six-week high, with renewed US-Iran military strikes stoking fears of supply disruptions.
The spike in crude prices also pushed global bond yields higher, reinforcing investor concerns that stubborn inflation could delay monetary easing or even force further interest rate hikes. The rupee came under pressure as well, with higher oil prices challenging recent currency gains that had been underpinned by RBI intervention and dollar selling by foreign banks.
In a supportive development for the currency, ICICI Bank reported it had raised $17.88 billion under the RBI’s FCNR scheme through August 31, bolstering dollar inflows that could help cushion the rupee against the impact of rising oil prices.
Among major laggards on the Sensex were HDFC Bank (-1.2%), Infosys (-1.3%), Reliance Industries (-0.6%), ICICI Bank (-0.8%), and TCS (-1.0%).