Indian Markets Drop Over 1% on U.S.-Iran Tensions; Rupee Weakens, Oil Rises

India's stock markets dropped sharply on Monday, May 11, 2026, with the Nifty 50 falling 1.3% to 23,852.30 and the Sensex shedding 1.5% to 76,184.15 by 10:20 a.m., amid renewed geopolitical tensions after U.S. President Donald Trump rejected Iran's response to peace proposals. The escalation triggered risk-off sentiment in emerging markets, particularly affecting India due to its import dependency and exposure to oil price volatility.

The Indian rupee depreciated by ₹1.45 to open at ₹94.98 per dollar, according to Clearing Corporation of India data, as foreign exchange reserves came under pressure. Global oil prices surged, with Brent crude futures rising 4.4% to over $105 a barrel, exacerbating inflation and current account concerns.

At a public rally in Telangana, Prime Minister Narendra Modi called on citizens to reduce consumption of imported goods, including gold and fuel, urging a one-year pause on gold jewellery purchases for weddings and promoting work-from-home to cut energy use. His remarks underscored growing government concern over external sector stability amid rising oil prices and currency weakness.

The market reaction reflects heightened sensitivity to global geopolitical risks and domestic policy signals. The Reserve Bank of India and Finance Ministry are expected to monitor capital flows and oil import costs closely in the coming days.