Indian benchmark indices closed sharply lower on Monday, May 11, as investors reacted nervously to rising geopolitical tensions in West Asia, surging crude oil prices and persistent foreign fund outflows. At the time of close, the 30-share BSE Sensex plunged 1,312.91 points, or 1.70 per cent, to close at 76,015.28, while the Nifty 50 tumbled 360.30 points, or 1.49 per cent, to settle at 23,815.85. Markets tumbled sharply as rising crude oil prices, FII selling and West Asia tensions triggered panic across sectors. Market breadth remained weak, with 2,779 shares declining against 1,390 advances.
The sharp rise in global crude oil prices emerged as one of the key reasons behind the selloff. Brent crude futures jumped 4.32 per cent to USD 105.7 per barrel after reports suggested that the United States and Iran failed to make progress on a peace agreement aimed at ending the ongoing West Asia conflict.
"Fresh concerns emerged after Donald Trump reportedly dismissed Iran’s response to the latest US peace proposal as 'totally unacceptable', dampening hopes of an immediate diplomatic breakthrough. The development has once again brought the Strait of Hormuz and broader risks of supply disruption in global energy markets back into focus," Ponmudi R, CEO of Enrich Money, said.
The spike in crude prices hurt oil marketing companies, with Indian Oil, BPCL and HPCL falling nearly 2.6 per cent each during the trading session.
The Indian rupee also came under severe pressure and weakened by 139 paise to 94.90 against the US dollar in early trade. According to forex traders, higher crude prices, continued foreign fund withdrawals and a stronger dollar weighed heavily on the domestic currency.
Foreign Institutional Investors continued their selling spree, offloading equities worth Rs 4,110.60 crore on Friday.
"The trend of FPI outflows is continuing this month. Through 8th May FPIs have sold equity worth Rs 14,232 crores through the secondary markets. This takes the total FPI sell figure through exchanges in 2026, so far, to Rs 2,18,540 crores," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
"Currency depreciation and concerns surrounding earnings growth in India have been important factors driving FPI flows out of India this year. The impressive earnings growth expected in markets like South Korea and Taiwan this year, thanks to the AI boom, is attracting FPI flows into these markets in a big way," he added.
Market volatility also surged sharply, with the India VIX climbing 12 per cent to 18.82, indicating heightened fear and uncertainty among investors.
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