Indian markets slid heavily on Thursday morning trade with the BSE Sensex plunging to an intraday low of 76,258.86, a fall of over 1,237 points. The NSE Nifty 50 hit an intraday low of 23,796.85, down around 380 points.
The trigger came overnight from an Axios report that stated that the US Central Command was set to brief President Donald Trump on new military options against Iran. This sent Brent crude surging past $126 per barrel, the highest price in four years, shattering the optimism from earlier in the week.
When the US-Israel coalition attacked Iran in late February, nine weeks ago, which led to the latter retaliating, Brent crude was trading around $70 per barrel. It is now at $126, an 80 per cent surge in under three months, driven almost entirely by the closure of the Strait of Hormuz, which channels roughly 20 per cent of global oil and LNG supplies.
Trump reportedly reviewed and rejected an Iranian proposal to reopen the Strait. India is the world's third-largest crude importer, and every dollar above $100 per barrel adds to existing pressure on the current account, the rupee, and margins.
The rupee breached 95 per US dollar on Thursday, under pressure from soaring oil prices and the Federal Reserve's hawkish tilt following Wednesday's rate decision. All 16 major Nifty sectors were trading in the red in the morning. The biggest losers in the 30-pack Sensex were Eternal, IndiGo, Hindustan Unilever, Mahindra & Mahindra, and Axis Bank.