Equities Sink as Oil Shock and Weakening US-Iran Truce Trigger Selloff

An end-of-day recap of all that transpired in the Indian markets, highlighting the major price movements and the factors driving them

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By Dehuti Jani

May 12, 2026 at 11:46 AM IST

Indian equities witnessed a sharp selloff on Tuesday, with investors fleeing risk assets as fading hopes of a US-Iran peace agreement and surging crude oil prices intensified concerns over India’s macroeconomic outlook. The Nifty50 plunged 1.83% or 436.30 points to 23,379.55, while the BSE Sensex tumbled 1.92% or 1,456.04 points to 74,559.24, marking their worst session in six weeks. Over two sessions, benchmark indices have declined around 3.4%, wiping out nearly $115 billion in market capitalisation on the NSE.

Investor sentiment deteriorated sharply after Donald Trump said the ceasefire with Iran was on “massive life support”, while Tehran rejected Washington’s latest peace proposal. The renewed geopolitical uncertainty pushed Brent Crude prices above $107 per barrel amid fears of prolonged supply disruptions in the Strait of Hormuz.

Prime Minister Narendra Modi urged lower fuel consumption, reduced foreign travel and curbs on imports and gold purchases as rising energy prices continued to pressure India’s foreign exchange reserves. India, which imports more than 90% of its crude oil requirements, remains highly vulnerable to prolonged oil price shocks.

The Indian rupee weakened to a fresh record low, while broad-based selling hit equities across sectors. IT, realty, consumer durable and media stocks led the decline, although metal and oil & gas shares outperformed due to higher commodity prices. Broader markets also came under heavy pressure, with the Nifty MidCap and Nifty SmallCap indices falling 2.54% and 3.17%, respectively.

Top Movers of the Day

Groww stayed in focus as investor interest remained strong on market-share gains and platform expansion. The stock fell 4.90% to ₹183.89 today.

Sun Pharmaceutical shares fell 1.49% to ₹1,844.80 as concerns over a potential $12–$13 billion acquisition of US-based Organon & Co. raised worries about higher debt, integration challenges, and a temporary slowdown in US specialty revenue growth.

Coal India traded weak 0.40% to ₹462.60 after reporting lower auction volumes amid concerns around the broader energy market slowdown.

Jyothy Labs remained under pressure and fell 3.88% to ₹228, following the termination of licensing agreements for the PRIL and Fa brands by Henkel.

Titan Company fell 3.5% to ₹4,058 due to continued selling pressure as elevated crude prices and a weaker rupee hurt discretionary consumption sentiment.

InterGlobe Aviation fell 1.66% to ₹4,228 as higher aviation fuel costs linked to rising Brent Crude prices weighed on airline profitability outlook.

R R Kabel hit a fresh high of ₹1,994 after gaining around 4.0% in an otherwise weak market. The stock rose following strong Q4 FY26 results showing the highest ever quarterly revenue, robust demand for wires and cables, and positive analyst outlooks.

Heritage Foods fell over 8% to ₹346 after Q4 FY26 net profit dropped 37% year on year due to higher raw milk procurement costs and supply constraints. Although revenue rose 10%, elevated input costs sharply squeezed margins, with only a partial pass-through to consumers.

Vedanta and Hindustan Zinc rose over 2% and led gains in metal stocks as the Nifty Metal outperformed the broader market.

Canara Bank outperformed the broader market despite mixed analyst views on its future growth outlook. The stock price ended 0.63% to ₹130.25.

Parag Milk Foods gained 2.14% to ₹218 after announcing a partnership with Tetra Pak to launch a milk-based protein drink in India’s first Tetra Prisma Aseptic 250E packaging format.

JSW Energy fell over 7.0% to ₹514.70 despite reporting a 38.0% YoY rise in Q4FY26 consolidated net profit.

Bharti Airtel remained in focus ahead of Q4FY26 earnings, with expectations of strong subscriber additions and continued premiumisation supporting growth outlook.

Futures & Options
Nifty May 2026 futures closed at 23,470, a premium of 90.45 points over the spot Nifty 50 close of 23,379.55, indicating that traders retained some bullish positioning despite sharp weakness in the cash market. The Nifty 50 declined 436.30 points or 1.83% during the session.

Market volatility continued to rise, with India VIX surging 3.92% to 19.28 amid persistent concerns over rising oil prices, geopolitical tensions in West Asia and pressure on the Indian rupee. HDFC Bank, Infosys and State Bank of India emerged as the most actively traded stock futures contracts. The May 2026 derivatives series will expire on 26 May 2026.

Bonds
India's government bond yields inched higher on Tuesday as fading hopes of a resolution to the Iran conflict kept investors cautious and limited fresh buying interest in the debt market ahead of India’s retail inflation data release. The benchmark 6.48% 2035 government bond yield rose to 7.0458% from Monday’s close of 7.0317%, reflecting persistent concerns around inflation and external sector risks linked to elevated Brent Crude prices.

Meanwhile, the yield on the new benchmark 6.94% 2036 bond remained largely steady at 6.9835%. Investor sentiment remained fragile as India’s heavy dependence on imported energy continued to raise macroeconomic concerns.

Forex
Indian rupee weakened to a fresh all-time low on Tuesday as fading hopes of a US-Iran peace agreement triggered a sharp rise in crude oil prices and intensified pressure on emerging market currencies. The rupee fell to an intraday record low of 95.7375 against the US dollar before recovering slightly to close at 95.6275, down 0.3% from the previous session. Traders attributed the late-session recovery to likely intervention by the RBI through state-run banks.

Rising Brent Crude prices, persistent foreign portfolio outflows and deteriorating risk sentiment continued to weigh heavily on the currency. India’s heavy dependence on imported energy has heightened concerns around inflation, current account pressures and foreign exchange reserves amid the ongoing West Asia conflict.

Crypto
Crypto markets turned volatile on Tuesday after reports that US President Donald Trump rejected Iran’s latest peace proposal, triggering renewed uncertainty across global risk assets. Bitcoin briefly traded above $82,000 before slipping back below the key $80,000 level. The cryptocurrency was last trading near $81,151, up 0.26% over the past 24 hours as investors weighed geopolitical risks against continued institutional interest in digital assets.

Ethereum declined 1.32% to around $2,308, while major altcoins showed mixed performance. XRP, BNB, Solana and Dogecoin posted modest gains, whereas Cardano and other select tokens traded lower.

US Stock Futures
US stock futures traded lower on Tuesday as investors awaited the closely watched April consumer inflation report and assessed the impact of higher oil prices on interest rate expectations and household spending. Futures linked to the S&P 500 declined 0.3%, while Nasdaq-100 futures dropped 0.7%. Futures tied to the Dow Jones Industrial Average were down modestly by around 46 points.

Markets expect the April US consumer price index to rise 3.7% year-on-year, with a firm 0.6% monthly increase, reinforcing concerns that inflation remains elevated. Persistently high inflation, combined with rising Brent Crude prices, has strengthened expectations that the Federal Reserve could maintain higher borrowing costs for longer.

US Treasury Notes
Yields on US Treasury moved higher in Tuesday’s premarket trading as investors reacted to escalating geopolitical tensions, elevated oil prices and expectations of persistent inflation. The benchmark 10-year Treasury yield rose around 1 basis point to 4.43%, while the policy-sensitive 2-year Treasury yield climbed more than 2 basis points to 3.97%. Rising yields reflected selling pressure in the bond market as traders reassessed the likelihood of prolonged higher interest rates.

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