Geopolitical Friction Over US-Iran Truce Triggers Sell-off in Indian Equities

The BSE Sensex and NSE Nifty experienced sharp declines on Thursday, reversing previous gains as diplomatic tensions flared between Washington and Tehran. The downturn follows conflicting reports regarding the scope and compliance of a recently announced ceasefire agreement. Market instability was triggered by Iran's decision to halt oil tanker passage through the Strait of Hormuz, citing US violations of a 10-point proposal. This escalation comes amid Israeli strikes in Lebanon, which Tehran claims were not addressed in the truce terms, leading to a breakdown in diplomatic trust. The BSE Sensex dropped 931.25 points, or 1.20%, to close at 76,631.65. The NSE Nifty fell 0.93% to 23,775.10. This follows a 4% surge the previous day driven by initial ceasefire optimism and the Reserve Bank of India's decision to maintain its current monetary policy status quo. Energy markets reacted swiftly to the blockade, with oil prices climbing over 3% and the US dollar index stabilizing above the 99.00 level. In India, heavyweights including HDFC Bank, ICICI Bank, and SBI fell approximately 2%, while IndiGo and Larsen & Toubro saw steeper declines of 3.6% and 2.8%, respectively. US President Donald Trump has indicated that military presence in the region will persist until a 'real agreement' is fully implemented. With Iran's Foreign Minister warning that the US must choose between a ceasefire or continued conflict, investors remain cautious about the potential for further escalation in the Middle East.