Indian Shares Plunge After Trump Ultimatum

(RTTNews) - Indian shares plunged on Monday as investors confronted with surging crude prices and a record-low rupee.

The dollar rose, benchmark Brent crude futures jumped more than 2 percent and U.S. Treasury yields hit an eight-month high after Washington and Tehran threatened to escalate hostilities.

U.S. President Donald Trump has threatened military action against Iran's power plants unless the Strait of Hormuz reopens within 48 hours.

Iran warned it would strike energy and water infrastructure across the Gulf in retaliation if Trump follows through with his threat.

"The West Asia region where the war is going on is an important route for our trade. A large chunk of our crude oil requirements is met by this region," Prime Minister Narendra Modi said while addressing the Lok Sabha today.

India imports over 85 percent of its crude oil requirements and the Gulf region accounts for a substantial portion of that import basket.

Therefore, India's external balance and government finances could be hit if oil prices stay high for an extended period.

The rupee was in a free fall today, weakening to around 93.9 against the dollar due to concerns around supply disruptions through the Strait of Hormuz and continued foreign fund outflows.

A weaker rupee makes imports more expensive, especially fuel and electronics, which can push up inflation and affect everyday costs.

Investors also digested weak economic data suggesting that India's infrastructure output rose 2.3 percent year-on-year in February, its slowest pace in three months.

The S&P BSE Sensex index hit an intraday low of 72,558.44 before recouping some loss to end the session down 1,836.57 points, or 2.46 percent, at 72,696.39.

The broader NSE Nifty index settled 601.85 points, or 2.60 percent, lower at 22,512.65 after having hit a low of 22,471.25 earlier.

The BSE mid-cap and small-cap indexes lost 3.8 percent and 3.9 percent, respectively. The market breadth was extremely weak, with 3,791 shares falling while 642 shares advanced and 123 shares closed unchanged.

Selling pressure was broad-based across most sectors. Among the prominent decliners, Mahindra & Mahindra, Adani Ports, HDFC Bank, IndiGo, Tata Steel, BEL, UltraTech Cement, Trent and Titan Company plunged 4-6 percent.