Sunday’s drone attack on the Barakah Nuclear Power Plant in Abu Dhabi, UAE, the Arab world's first and only commercial nuclear facility, sent shockwaves through global markets on Monday morning, driving Indian equities sharply lower and pushing the rupee to yet another record low. The attack saw three drones enter UAE airspace from the western border; two were intercepted, but a third struck an electrical generator on the outer perimeter of the $20-billion plant. The reactors remained unaffected, radiation levels were stable, and UAE authorities said: "all units are operating as normal."
Nevertheless, the IAEA Director-General Rafael Grossi expressed "grave concern", and India's Ministry of External Affairs called the incident a "dangerous escalation."
In early trade on Monday, the BSE Sensex had fallen over 1057 points to touch an intraday low of 74,180.26, while the Nifty 50 dropped to an intraday low of 23,317.10 before partially recovering.
Fifteen of 16 major sectoral indices declined, with small-caps down 2.1 per cent and mid-caps down 1.6 per cent. The selling was broad as the market buckled under cumulative stress from weeks of rising crude prices, a collapsing rupee and relentless foreign outflows.
Crude, rupee, and FII
Brent crude jumped to $111–112 per barrel, a two-week high, as markets priced in the risk of further Gulf infrastructure attacks. The rupee fell 44 paise to a fresh record low of 96.25 against the US dollar, having already crashed below 96 for the first time on Friday before closing at 95.81.
The scale of the foreign investor exodus is now historic. Foreign portfolio investors have sold $23.52 billion of Indian stocks in 2026 so far, already surpassing the previous record annual outflow of approximately $18–18.9 billion set in all of 2025.
Against this, two consecutive days of net FII buying, including ₹1,329.17 crore purchased on Friday, offered little solace. The IT sector (Infosys, TCS, Tech Mahindra) and Bharti Airtel bucked the trend and traded higher.
However, Tata Steel fell 5 per cent on a smaller-than-expected quarterly profit. Power Grid slid 4 per cent despite reporting a nearly 10 per cent rise in profits, but markets punished it after analysts noted that the profit growth was driven by a ₹52.8 billion deferred tax asset.
The Centre placed silver under a licensed import regime on Saturday, just days after import duties on gold and silver were raised from 6 per cent to 15 per cent on May 13, taking the effective duty, including IGST, to over 18 per cent.
But there was one silver lining. India's forex reserves rose $6.295 billion to $696.988 billion during the week ended May 8, partially recovering from the prior week's $7.794 billion drawdown that had taken reserves to $690.693 billion.