Indian shares slide as US to blockade Iran ports after failed peace talks

Indian shares fell on Monday, tracking losses across Asia as oil surged above $100 a barrel ahead of a U.S. blockade of Iran’s ports after weekend talks between the two countries failed to yield a deal to end the war.

The Nifty 50 fell 0.86% to 23,842.65 and the Sensex slid 0.91% to 76,847.57. Both indexes regained some ground after dropping about 2.1% earlier in the session.

Other Asian markets fell 0.9%.

“We don’t think it is fair to expect a deal (between Iran and U.S.) in one sitting. From markets’ perspective, the recovery last week indicated that worst is over for Indian equities unless there is a significant escalation,” said Arun Malhotra, fund manager at CapGrow Capital.

The benchmarks had risen about 6% last week, marking their strongest weekly performance in more than five years as investors took comfort from a fragile U.S.-Iran ceasefire.

Malhotra expects volatility to remain elevated, with markets driven by headline risks.

The Nifty volatility index jumped to 20.5 from 18.8 on Friday.

Fifteen of the 16 major sectors fell. The broader small-caps and mid-caps shed 0.5% and 0.6%, respectively.

Oil-to-telecom conglomerate Reliance Industries dropped 2.6% after the government raised export duty on diesel and aviation turbine fuel.

Tourism, paint and oil marketing companies fell as investors gauged the impact of higher crude oil prices on margins.

Auto stocks slid 2.1% after media reports said Delhi’s draft electric vehicle policy proposed large exemptions for EVs to curb air pollution, compounding concerns over potential supply disruption from the Middle East war.

EV-linked stocks gained, with Ather Energy, JBM Auto and Olectra Greentech rising 5.2%, 1.9% and 2.5%, respectively.

Heavyweight financials dropped 0.6%.

Domestic markets will be closed on Tuesday for a local holiday. Trading will resume on Wednesday.