A sharp 14 per cent surge in crude oil prices in four sessions, the overnight US Federal Reserve's hawkish commentary and concerns that the US-Iran ceasefire may collapse weighed in on investor sentiment, offsetting exit poll 2026 results that signalled consolidation for the ruling party in the just gone assembly elections.  At 12.45 pm, the BSE Sensex was trading at 76,665.05, a drop of 831.31 points or 1.07 per cent. This 30-pack index was down 1,237.50 points at day's low. Nifty stood at 23,914.85, down 262.80 points or 1.09 per cent.

Crude oil rebound
The biggest trigger for the market fall was a sharp 14 per cent rebound in crude oil prices in four sessions. At the time of writing this report, Brent futures for July delivery were trading 2.89 per cent higher at $113.63 per barrel. This was in addition to 5.79 per cent rise in the previous session; 2.66 per cent and 2.58 per cent in the preceding two.  

"Escalating US pressure on Iran, including potential extension of a naval blockade and stricter enforcement actions on tanker movements, has heightened concerns over constrained flows through the Strait of Hormuz. Additional support came from a sharp 6.2 million barrel draw in US crude inventories and declines in refined product stocks, signaling resilient demand," Kotak Neo Commodity Insight said.

The rising crude oil prices is hurting rupee, which hit a fresh all-time low of 95.32 against the dollar today. This, analysts said, is a textbook reflexive trade - rising oil prices triggering FII outflows, FII outflows compounding the dollar demand from oil importers, and the combination overwhelming whatever defence the RBI is putting up.

US Fed hawkish tone
The second biggest trigger was the hawkish tone of the US Fed, which hinted at no rate easing until clarity emerges on inflation front. US markets fell overnight and Asian markets were all in the red today. 

The Fed kept its policy rate unchanged at 3.5-3.75 per cent, as widely expected, with the usual dissent in favor of a cut by Governor Miran. 

"Interestingly, however, three Governors (Hammack, Kashkari, and Logan) dissented against the "easing bias" in the statement, reflecting a divided and cautious Fed. This caution is further underscored by the explicit reference to the Middle East conflict as a contributor to a high level of uncertainty about the economic outlook," Emkay Global noted. 

The S&P500 dipped, while the US yield curve bear-flattened. The market has now completely priced out any rate cuts in 2026, while flagging 10 per cent possibility of a rate hike this year, Emkay said.

US-Iran war concerns
The US President Donald Trump would reportedely receive a briefing on Thursday from the leader of the US Central Command, ​Brad Cooper, on new plans for potential military action against Iran, Axios reported on ‌Wednesday. The report cited unidentified sources. In a Truth social post, the US President Donald Trump said: "Iran can’t get their act together. They don’t know how to sign a nonnuclear deal. They better get smart soon."