Indian Stocks Plummet as Trump Rejects Iran Peace Proposal

Indian equity benchmarks plummeted on Monday, September 28, as geopolitical tensions in West Asia triggered a massive sell-off. The BSE Sensex dropped 1,124.02 points (1.52%) to 72,771.72, while the NSE Nifty fell 360.25 points (1.56%) to 22,780.25. The single-day crash wiped out approximately Rs 7.52 lakh crore in investor wealth, contributing to a broader monthly decline of over 5% since August 27.

Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end fighting, signaling that new military strikes could occur after the midterm elections. While Trump stated that "talks would continue this week," Iranian Foreign Minister Abbas Araghchi warned that Iran is prepared for the resumption of war with the United States. This diplomatic deadlock pushed Brent crude prices above $108 per barrel, increasing inflationary risks for India.

Market volatility was further intensified by rising US Treasury yields, with the 10-year bond exceeding 5%, and expectations of continued monetary tightening by the US Federal Reserve. These factors accelerated foreign fund outflows, with foreign portfolio investors offloading Indian equities worth Rs 17,131 crore in September. The Indian Rupee also weakened to 96.00 against the dollar amid the turmoil.