Indian equity market saw sharp selling on Wednesday amid persistent pressure from rising crude oil prices, weakness in the rupee and cautious global cues. The benchmark indices declined up to 0.9% in early trade after US President Donald Trump warned that America could strike Iran again if no agreement was reached with Tehran.

“...We're going to end that war very quickly. They want to make a deal so badly...You are going to see oil prices plummet,” said Trump, while speaking at the White House.

Amid persistent concerns over U.S.-Iran conflict, the BSE Sensex declined as much as 672 points, or 0.89%, to 74,529.41. The broader NSE Nifty 50 tumbled 220 points, or 0.94%, to slip below 23,400 level.

The broader market also remained under pressure, with the Nifty Smallcap 100 falling 0.6% and the Nifty Midcap 100 down 0.26%, reflecting weak risk appetite across segments.

The market volatility remained elevated, with India VIX climbing over 1% to 18.89.

The sell-off in Indian equities was in sync with Asian peers as rising global bond yields continued to pressure risk assets worldwide. The yield on the benchmark U.S. 10-year Treasury stood at 4.66%, while the 30-year Treasury yield surged to 5.19%, its highest level in nearly 22 years.

“With the risk-free return at such high levels, the appetite for risky equity should decline. This is more valid in the case of highly valued AI stocks. But then markets have an ability to surprise and, therefore, the correction need not happen at a time when everyone expects,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Top gainers and losers

Among Sensex constituents, Bharat Electronics emerged as the top loser, plunging nearly 3% to ₹410.70. The stock was followed by Tata Steel, which declined over 2% amid weakness in metal counters.

Other notable laggards included Eternal (Zomato), down 1.3%, and UltraTech Cement, which slipped over 1%. FMCG heavyweight Hindustan Unilever fell close to 1%, while financial stocks such as State Bank of India, Bajaj Finance, Kotak Mahindra Bank and ICICI Bank traded lower by up to 0.8%.

Weakness was also visible in consumption and telecom names, with Titan Company, Bharti Airtel, InterGlobe Aviation and ITC trading in the red.

On the gaining side, select defensives and auto stocks provided some support to the market. Reliance Industries was the top gainer on the Sensex pack, rising 0.3%, followed by Mahindra & Mahindra and Adani Ports and Special Economic Zone, which gained around 0.25% each.

IT and pharma counters also saw selective buying, with Tata Consultancy Services and Sun Pharmaceutical Industries trading marginally higher. Shares of Larsen & Toubro and Asian Paints also managed modest gains despite weak broader sentiment.

Among sectoral indices, rate-sensitive and domestic-focused pockets witnessed selling pressure. Nifty Realty dropped 1.15%, while Nifty FMCG, PSU Bank and Private Bank indices declined up to 0.8%. Nifty Media emerged the worst-performing sector, falling more than 2%.

Investor sentiment remained cautious as elevated Brent crude prices and continued weakness in the rupee heightened concerns over inflationary pressures and foreign fund flows. Extending its losing streak, the rupee hit another lifetime low on May 20, opening 33 paise weaker at 96.86 against the U.S. dollar.

The rupee has weakened nearly 5% since the onset of the Iran conflict and around 11% over the past year. Rising crude prices, currently hovering around $110 per barrel, have sharply increased dollar demand and weakened risk appetite, making the rupee one of the weakest-performing Asian currencies.