Indian shares decline as Middle East conflict raises inflation worries

Indian shares fell on Tuesday as rising Middle East tensions pushed oil prices up and added to worries about inflation in the world’s third-largest oil importer.

The U.S. military carried out a third consecutive night of strikes against Iran on Monday as President Donald Trump reinstated a blockade of Iranian shipping and proposed charging a 20% fee to guard the Strait of Hormuz.

The benchmark Nifty 50 fell 0.66% to 24,052.05, while the BSE Sensex lost 0.72% to 77,054.94.

Twelve of the 16 major sectors declined. High-weightage financials and banks lost 1.1% each.

Auto index slipped 1.6% as rising crude prices fanned worries over fuel costs and crude-linked input pressures. The broader small-caps and mid-caps fell 1% and 0.4%, respectively.

Brent crude jumped 4.1% to about $87 per barrel, its highest in a month, after Iran attacked two Emirati oil tankers, weighing on Asian and European markets.

“Market sentiment has turned cautious after renewed concerns over disruptions to shipping through the Strait of Hormuz,” said Rajesh Palviya, head of research at Axis Direct.

Brent crude’s sharp jump to around $87 per barrel remains the key monitor for Indian markets, as sustained higher oil prices could fuel imported inflation, widen the current account deficit and reduce the scope for monetary easing, Palviya said.

For Nifty, 24,300-24,400 remains the resistance while the benchmark has support near 24,000 levels, said Axis Securities and Choice Broking.

HCLTech fell 4.5% as brokerages flagged that its unchanged growth outlook pointed to lingering demand uncertainty and slower revenue conversion.

Biocon surged 6.4%, leading pharma index 1% higher. About 46 million shares of the drug maker changed hands in a block deal on Tuesday, according to exchange data.

Viatris’ Mylan plans to sell up to 92 million Biocon shares, worth as much as $363 million, according to a term sheet seen by Reuters.