Indian equity benchmarks, the Nifty50 and BSE Sensex, experienced a sharp selloff on Monday, with both indices plunging over 1% as bearish sentiment intensified on Dalal Street. Rising global bond yields, the rupee hitting a fresh all-time low, and other macroeconomic concerns added pressure on investors.
The Sensex tumbled over 1,000 points to slip below the 74,300 mark, while the Nifty 50 dropped more than 300 points to trade under 23,350. This steep decline erased nearly Rs 7 lakh crore from the total market capitalisation of BSE-listed companies, reducing it to around Rs 454 lakh crore.
Market volatility surged sharply, with India VIX climbing over 5% to hover near 19.78. The weakness extended across broader markets, with both the Nifty Midcap 100 and Nifty Smallcap 100 indices falling more than 1% each.
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Trump Issues Fresh Warning to Iran
US President Donald Trump escalated geopolitical tensions by warning that time was running out as negotiations with Iran over uranium stockpiles, sanctions relief, and compensation linked to the conflict remained deadlocked. In a post on Truth Social, Trump urged Iran to 'get moving, FAST,' while warning that 'there won't be anything left of them' and emphasising that 'TIME IS OF THE ESSENCE.' His comments come amid rising instability in the Middle East, where the ceasefire situation continues to weaken.
At the same time, tensions in the Gulf region intensified after a drone strike triggered a fire at a nuclear power plant in the UAE, while Saudi Arabia said it had intercepted three drones. UAE authorities stated they were investigating the source of the attack and asserted that the country reserved the right to respond to what it described as 'terrorist attacks.'
Bond Yields Hit Historic Highs
Bond yields across major economies surged to unprecedented levels as persistent Middle East tensions intensified concerns around inflation and fiscal stability. The yield on the benchmark US 10-year Treasury note climbed to 4.632%, marking its highest level since February 2025.
Meanwhile, the 30-year Treasury yield jumped to 5.156%. The yield on the 2-year note, closely tied to expectations surrounding US Federal Reserve policy, advanced to 4.101%. The spike followed a widespread selloff in global debt markets, which pushed bond prices lower and yields sharply higher.
Japan also witnessed a steep rise in bond yields. The yield on the country's 30-year government bond touched a record high of 4.170%, while the 10-year yield rose to 2.800%, its highest level since October 1996. Rising bond yields generally make fixed-income instruments more attractive compared to equities, often leading to weakness in stock markets.
Rupee Slides to a New Record Low
The rupee fell to an all-time low of 96.18 against the US dollar on Monday, surpassing its previous lifetime low of 96.1350. So far in 2026, the Indian currency has emerged as the weakest performer in Asia and has declined 5.5% since the Iran-US conflict began on February 28.
This also marked the fifth straight trading session in which the rupee touched a fresh record low. Elevated crude oil prices have pushed bond yields to historic highs, hurting investor sentiment and weakening appetite for risk assets.
'Market participants remain cautious amid fears that elevated crude prices may persist for a longer duration despite government measures to control volatility. Near-term rupee range is expected between 95.55–96.25,' said Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities.
Oil Climbs Above $110 per Barrel
Crude oil prices surged past the $110-per-barrel mark once again after fresh remarks from US President Donald Trump raised fears of a further escalation in the conflict-hit Middle East region.
Brent crude advanced nearly 2% to trade around $111 per barrel, while WTI crude gained more than 2% to move above $108 per barrel during Monday morning trade.
Global Markets Witness Sharp Selloff
Renewed geopolitical worries triggered a broad-based decline in global equity markets. In Asia, Japan's Nikkei slipped about 1%, while Hong Kong's Hang Seng index dropped more than 1%. China's Shanghai Composite traded marginally lower, whereas South Korea's Kospi managed slight gains.
On Wall Street, the Nasdaq and S&P 500 indices had already fallen by as much as 1.5% on Friday. Dow Jones futures were also down nearly 1%, signalling a weak opening for US markets later in the day.
European equities too ended sharply lower on Friday, with Germany's DAX, France's CAC, and the UK's FTSE each falling around 2%.
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