Indian equity markets came under heavy selling pressure on Wednesday, with the Sensex falling more than 600 points and the Nifty slipping below the 24,250 level as renewed geopolitical tensions, rising crude oil prices and weakness in global technology stocks weighed on investor sentiment.

The decline came after Indian equities had rallied in recent weeks on easing oil prices, improving foreign investor flows and expectations of healthy June-quarter corporate earnings. Fresh military escalation between the United States and Iran, along with renewed concerns over the sustainability of the global artificial intelligence-driven technology rally, prompted investors to turn cautious.

US-Iran Tensions Push Brent Crude To Around $76 Per Barrel

Renewed military tensions between the United States and Iran emerged as the primary trigger for Wednesday’s market decline.

Brent crude prices surged more than two per cent to around $76 per barrel after the US launched fresh strikes on Iran, reviving concerns over potential disruptions to oil supplies from the Middle East.

Rising crude oil prices present a significant economic risk for India, which imports nearly 85 per cent of its crude oil requirements.

Higher oil prices can increase India’s import bill, widen the current account deficit, add to inflationary pressures and raise input costs for companies, potentially affecting corporate earnings.

Sectors dependent on fuel costs and domestic consumption came under pressure following the rise in crude oil prices.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the sharp increase in oil prices had brought uncertainty back to the market.

“With the renewed US-Iran tensions and the consequent spike in Brent crude to $76, the market is again back to uncertain territory. How long this would last and what would be its consequences are now in the realm of uncertainty,” he said.

Wall Street Tech Sell-Off Weighs On Global Markets

Weakness in global technology shares added to the pressure on Indian equities after all three major US stock indices closed lower overnight.

The technology-heavy Nasdaq Composite declined 1.16 per cent, recording the steepest fall among the major Wall Street indices.

The S&P 500 dropped 0.45 per cent, while the Dow Jones Industrial Average declined 0.25 per cent.

Selling pressure was particularly visible among semiconductor companies, renewing concerns over whether the artificial intelligence-driven rally in global technology stocks could continue at its recent pace.

Micron Technology and several other US chipmakers declined sharply, dragging the Nasdaq lower and contributing to weakness across Asian markets on Wednesday.

Samsung Shares Fall Despite Record Earnings Forecast

Investor caution deepened after Samsung Electronics announced another strong quarterly earnings forecast.

The company projected a 19-fold increase in operating profit for the April-June quarter to 89.4 trillion won, marking its third consecutive quarter of record earnings.

Despite the strong outlook, investors booked profits in Samsung shares, while rival semiconductor company SK Hynix also came under selling pressure.

Market participants remained concerned about whether exceptional earnings growth driven by demand for artificial intelligence infrastructure could be sustained.

Daisuke Hashizume, Senior Strategist at Daiwa Securities, said investors remained cautious about AI-related stocks.

“Investors cannot fully regain their confidence in AI shares. Samsung Electronics flagged a strong outlook but the market was not convinced that prices will keep rising,” Hashizume told Reuters.

DeepSeek Chip Report Adds To Concerns Over AI Stocks

Investor concerns were further heightened by a Reuters report that Chinese artificial intelligence startup DeepSeek was developing its own AI chip.

If successful, the initiative could reduce DeepSeek’s dependence on major international semiconductor manufacturers for training and operating artificial intelligence models.

The development intensified concerns that the significant investments flowing into AI infrastructure and semiconductor companies could begin to moderate.

Investors have consequently started reassessing valuations across the technology sector, contributing to corrections in several AI-heavy markets, particularly South Korea and Taiwan.

Foreign Investors Remain Net Buyers Of Indian Equities

Despite Wednesday’s market weakness, foreign institutional investor activity remained a positive factor for Indian equities.

FIIs purchased Indian shares worth Rs 393.19 crore on Tuesday, while domestic institutional investors sold equities worth Rs 383.43 crore.

According to Vijayakumar, foreign institutional investors bought Indian equities worth nearly Rs 1,991 crore over the previous three trading sessions.

“The uncertainty surrounding the chip trade and the huge concentration risks associated with investing in three stocks are turning FIIs away from markets like South Korea and Taiwan and towards stable markets like India,” he said.

Vijayakumar, however, cautioned that foreign investment flows could reverse if tensions in the Middle East intensified further and crude oil prices continued to rise.

Investors Watch Geopolitical Tensions, Oil Prices And Corporate Earnings

Market participants are closely monitoring whether tensions between the United States and Iran escalate further and how developments in the Middle East affect global oil supplies.

The direction of crude oil prices will remain particularly important for Indian markets because of the country’s dependence on imported energy.

Investors are also awaiting the June-quarter earnings season to assess whether Indian companies can sustain profit growth amid geopolitical uncertainty and potential inflationary pressures.

Until greater clarity emerges on geopolitical developments, oil prices and corporate earnings, volatility is expected to remain elevated in Indian equity markets.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store –  https://apps.apple.com/in/app/newspin/id6746449540 

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share