Indian Markets Tumble as US-Iran Military Strikes Spike Oil

Indian equity benchmarks and the rupee dropped sharply on Wednesday, September 2, 2026, following a major military escalation between the United States and Iran. The Federal government of the United States, under the administration of President Donald Trump, launched overnight airstrikes against targets in Iran, which prompted a retaliatory Iranian military response.

The conflict drove Brent crude oil prices to a near-six-week high of approximately $96.6 per barrel, fueling investor fears of supply disruptions through the Strait of Hormuz. In response, the BSE Sensex fell over 700 points and the NSE Nifty slumped, with the most acute selling pressure hitting the IT, auto, and realty sectors. The Indian rupee also declined to 94.97 against the US dollar.

Market volatility was further compounded by rising US 10-year Treasury yields, which climbed toward a 20-month high. Investors reacted to the increased probability of a Federal Reserve rate hike in September, strengthening the dollar's safe-haven status and threatening the attractiveness of emerging markets. While the Reserve Bank of India is monitoring the currency slide, analysts noted that strong domestic GDP growth and ample foreign exchange reserves provide some cushion against these external headwinds.