Sensex Falls 600 Points, Nifty Below 23,500 Amid Persistent US-Iran Tensions, High Yields, Crude Oil

Benchmark indices opened lower on May 20, following weakness in Asian markets amid ongoing concerns about high crude oil prices and rising global bond yields.

The BSE Sensex opened 432.28 points lower, or 0.57 per cent, at 74,768.57, while the NSE Nifty 50 started 160.75 points lower, or 0.68% per cent, at 23,457.25.

Investors also remained cautious over the lack of progress in US-Iran peace negotiations and continued disruptions around the Strait of Hormuz, a critical shipping route which carries nearly one fifth of the total global oil demand.

Iran has warned that any fresh military action by the United States or Israel would lead to stronger retaliation. In a post on X, Iranian Foreign Minister Abbas Araghchi said Tehran had learned from previous conflicts and that “a return to war will feature many more surprises.”

His remarks came after US President Donald Trump gave Iran a “two-to-three-day” deadline to reach a peace agreement, warning that the United States could launch fresh strikes on Iran if talks fail.

IT, Pharma, Healthcare Buck Trend

Barring IT, pharma, and healthcare, all other major sectoral indices were trading in red. Nifty IT and Nifty Pharma traded about 0.50 per cent higher, while Nifty Healthcare was up by around 0.30 per cent. On the other hand, Nifty PSU Bank, Nifty Realty, Nifty Chemicals, and Nifty Media fell more than one per cent each. Nifty Auto, Nifty Financial Services, Nifty FMCG, Nifty Metal, Nifty Private Bank, Nifty Consumer Durables, and Nifty Oil & Gas were also in the negative territory.

Nifty Bank, which tracks the performance of 14 most liquid and largest banks, also fell as much as 1 per cent to touch the day's low at 52,836.10.

Broader market indices mirrored the weakness in benchmarks. Nifty Midcap 100, Nifty Smallcap 100, and Nifty 500 were down by about 0.50 per cent each.

Bharat Electronics, Tata Steel, Eternal (formerly Zomato), Nestle India, Hindustan Unilever, and Adani Enterprises were the top drags on Nifty 50, falling between 1 per cent and 2.50 per cent. On the other hand, Hindalco, Bajaj Auto, ONGC, and Reliance Industries provided support, rising between, 1 per cent and 3 per cent.

Crude Oil Remains Firmly Above $110 Per Barrel, Rupee Hits New Record Low

Crude oil prices fell slightly on May 20 but remained firmly above the $110 per barrel level. At 10:00 AM, Brent crude futures were down 0.35 per cent at $110.50 per barrel, while US West Texas Intermediate (WTI) crude was trading near $103.65 a barrel, down 0.36 per cent from previous close.

Investors remained cautious as the Strait of Hormuz remained effectively closed, even as talks continued between Washington and Tehran.

The rupee weakened further on May 20, touching a new record low of 96.89 mark against the US dollar amid high crude oil prices and persistent uncertainty around the US-Iran war.

Global Indices Show Weakness Amid Rising Bond Yields

Wall Street indices fell for a third straight session overnight as investors worried about rising inflation and higher US bond yields. The Nasdaq led the losses, falling 0.84 per cent, while the S&P 500 declined 0.67 per cent and the Dow Jones slipped 0.65 per cent.

Investor sentiment remained cautious as the US 10-year Treasury yield rose to 4.68 per cent, its highest level in more than a year, amid concerns that stubborn inflation could force the US Federal Reserve to raise interest rates again in the future.

Meanwhile, the 30-year Treasury yield climbed above 5 per cent for the first time since 2007, touching 5.18 per cent.

Asian markets extended their losses for a fourth straight session on May 20. MSCI’s broadest index of Asia-Pacific ex-Japan fell 1.40 per cent.

Japan’s Nikkei declined 1.70 per cent, while South Korea’s KOSPI tumbled nearly 2 per cent. Hong Kong’s Hang Seng index traded 0.66 per cent lower, and China’s CSI 300 index also remained in the red.