Domestic markets came under heavy pressure on Monday, with the Sensex and Nifty falling around 1.4 per cent each as rising oil prices, driven by the West Asia conflict, kept investors on edge.

While the Sensex plunged over 1,000 points to trade below 72,900, the Nifty 50 dropped more than 300 points to slip below the 22,850 level. The selling-off was attributed to the escalating conflict in West Asia, as negotiations between the United state and Iran to reopen the vital Strait of Hormuz remained stalled.

For the unversed, the Strait of Hormuz is a crucial maritime chokepoint that provides for nearly 20 per cent of the global oil and gas trade. Iran blocked this key route in March following the US-Israeli attack, sending shockwaves to global energy markets.

The broader market was affected, too.Bombay stock exchange (BSE) total market capitalisation dipped from around Rs 483.25 lakh crore at the start of the session to about Rs 477.08 lakh crore in early trade.

Around 10 AM on Monday, September 28, the Sensex was down 883 points at 73,015.22, while the Nifty 50 fell 272.45 points to trade at 22,864.80. By 10:46 AM, the Sensex had fallen 1,010.84 points to 72,884.90, while the Nifty 50 was down 315.75 points at 22,842.75.

Why Markets Are Falling

Crude oil crosses $106

The biggest immediate concern for Indian markets is crude oil, the prices of which are surging amid the US-Iran conflict.

While Brent crude rose to $106.61 a barrel, WTI crude increased to $93.75. After a period of calm, tensions intensified between the US and Iran, driving the surge in crude prices.

For India, a sustained rise in crude prices is crucial as it depends heavily upon imports to meet its energy requirements.

Higher crude prices can increase India’s import bill, while also squeezing the profit margins of oil-dependent businesses.