Markets closed lower for the fourth consecutive session on Monday as a brief morning rally dissipated amid renewed hostilities in West Asia, rising crude oil prices, and persistent foreign selling. This combination left bulls with minimal support throughout the day.
“Recent U.S. strikes and the escalation in cross-border hostilities between Israel and Lebanon have exerted selling pressure on equity markets, reflecting heightened geopolitical uncertainty and a shift towards risk-off sentiment,” stated Vinod Nair, Head of Research at Geojit Investments Limited.
The Sensex closed at 74,267.34, down 508.40 points or 0.68% from its previous close of 74,775.74, after opening at 75,203.02. The Nifty 50 completed the session at 23,382.60, down 165.15 points or 0.70% from Friday’s close of 23,547.75, marking its lowest closing level since May 12. Opening with a 107-point gap-up, Nifty sharply reversed, shedding over 375 points from its intraday high of 23,733.70 to close near the day’s low. NSE cash market turnover was subdued, falling by more than 6% compared to the May monthly average.
The day’s losses were primarily driven by a new escalation in the West Asia conflict. U.S. strikes on Iranian military targets prompted retaliatory attacks on a U.S. installation, raising concerns about the stability of the ceasefire and effectively closing the Strait of Hormuz. Brent crude surged above $93 per barrel, with international crude prices rising nearly 4%. Domestic MCX crude futures jumped over 5% to approach ₹8,700. For India, which is heavily reliant on Gulf energy imports, the disruption signifies a direct macroeconomic risk.
In tandem, rising crude prices negatively impacted gold. MCX Gold decreased by around 0.92% to ₹1,59,500, while COMEX Gold dropped nearly 0.80% to the $4,500 level as inflation concerns driven by energy prices weighed on bullion sentiment.
Sector-wise, consumer staples faced significant selling pressure, falling 2.25%. Hindustan Unilever declined 1.64% to ₹2,118.10, Tata Consumer Products decreased by 1.73% to ₹1,158.00, and ITC also ended lower. Higher crude prices elevate packaging, transportation, and logistics costs for consumer companies, while uncertainties regarding monsoon outlook cloud rural demand. Stocks in PSU Banks, Realty, Auto, and Financials also closed in the red. Bajaj Finance fell 1.51% to ₹894.50, Mahindra & Mahindra dropped 1.65% to ₹2,995.20, and Max Healthcare fell 1.68% to ₹948.90.
The IT sector was a notable exception, gaining over 2.55%. Tech Mahindra rose 4.86% to ₹1,556.00, Infosys increased by 4.63% to ₹1,214.60, TCS gained 3.34% to ₹2,334.30, and HCL Technologies added 2.27% to ₹1,210.70. Coal India also bucked the trend, rising 3.43% to ₹473.60.
Textile stocks saw gains after the government announced a temporary removal of the 11% customs duty and Agricultural Infrastructure Development Cess (AIDC) on cotton imports until October 2026. As cotton comprises 65-70% of production costs for spinning mills, the duty waiver improves raw material availability and margin prospects for companies. Vardhman Textiles, Arvind, Gokaldas Exports, Raymond Lifestyle, Welspun Living, and Indo Count were among the beneficiaries.
Broader markets underperformed; the Nifty Midcap 100 fell 1.45%, and the Smallcap 100 dropped 0.90%. The BSE advance-decline ratio stood at 0.58, indicating sustained selling beyond the headline index.
The Indian rupee relinquished early gains to close flat against the dollar after weakening more than 25 paise intraday, with the USD/INR hovering near ₹95, impacted by rising crude prices and subdued equity sentiment.
“The current growth-inflation dynamics create a strong case for at least two 25 basis point rate hikes between August and December 2026,” noted Mandar Pitale, Head of Financial Markets at SBM Bank India, ahead of the RBI’s Monetary Policy Committee meeting scheduled for June 3-5. The consensus anticipates the repo rate to remain at 5.25% this week, but analysts flagged the possibility of the RBI raising its inflation forecast for FY27 from 4.6% to the 4.9-5% range, while trimming its growth projection from 6.9% to 6.7-6.8%, complemented by hawkish forward guidance pointing towards a potential hike in August.
“While India’s economic fundamentals remain strong, volatility may persist in the near term as we remain cautious amid geopolitical and inflation-related uncertainties,” commented Abhinav Tiwari, Research Analyst at Bonanza. Investors will also monitor U.S. Non-Farm Payrolls and unemployment data due later this week, as they may serve as significant triggers for global risk sentiment and commodity markets. Auto monthly sales numbers, particularly Maruti Suzuki’s record performance alongside healthy figures from Tata Motors and Mahindra & Mahindra, offered some corporate reassurance but did not lift auto stocks on the day. Progress in India-U.S. interim trade negotiations remains another factor that the market will track for direction.
Published on June 1, 2026.
