Sensex Crashes Over 1000 Points as US-Iran Deal Hopes Fade, Market Volatility Spikes
MARKET WRAP | FRIDAY, 29 MAY 2026
SENSEX CRASHES 1,092 POINTS AS US-IRAN DEAL HOPES UNRAVEL; GOLD SLIPS, CRUDE WHIPSAWS
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Indian equity markets ended the truncated trading week on a deeply discouraging note, with benchmark indices posting their steepest single-day losses in weeks as the fragile optimism around a US-Iran ceasefire extension gave way to fresh uncertainty. After returning from a Bakri Eid holiday on Thursday, investors were greeted by a volatile global landscape featuring mixed diplomatic signals from the Persian Gulf, a resurgent crude oil price, and an Indian rupee under sustained pressure.
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INDIAN MARKETS
The BSE Sensex fell 1,092.06 points, or 1.44%, to close at 74,775.74, while the Nifty50 declined 359.4 points, or 1.50%, to settle at 23,547.75. The broader market also came under pressure, with the Nifty MidCap 100 falling 1.33% and the Nifty SmallCap 100 declining 0.85%. Power Grid, IndiGo, Bajaj Finance, and UltraTech Cement were among the top losers on the Sensex, while Tech Mahindra, HCL Technologies, and L&T bucked the trend to close in the green.
The day began with cautious optimism. Earlier in the session, reports had emerged that the US and Iran agreed to a 60-day truce renewal as both sides worked toward an agreement to end the war, with the deal awaiting President Donald Trump's approval. Asian markets and US futures had firmed up on this news in the morning. However, that hope proved short-lived. By afternoon, fresh geopolitical flashpoints — including Iranian missile launches and renewed US military action — sent sentiment sharply southward. Iran's armed forces had fired missiles at unspecified targets on late Thursday, while the Pentagon confirmed that Tehran had earlier fired a ballistic missile toward Kuwait and launched attack drones in and around the Strait of Hormuz.
The intraday range told the full story of the session's emotional arc: the Sensex swung between a high of 76,220.02 and a low of 74,589.11, ultimately surrendering all early gains to close near the day's lows, weighed down by a burst of fag-end selling driven by rising uncertainty over the US-Iran situation.
Sectorally, rate-sensitive and infrastructure-linked names bore the brunt. Energy, realty, and financials underperformed, while select IT and pharma stocks provided a partial buffer. The Nifty IT index emerged as a relative outperformer, reflecting the sector's defensive appeal and positive global tech cues from Wall Street's recent record-setting run.
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ASIAN MARKETS
Asian markets delivered a broadly positive performance on Friday, even as geopolitical tensions kept gains in check.
Asia-Pacific markets rose, with South Korea's Kospi hitting a fresh intraday record and Japan's Topix reaching a new all-time high, as investors looked past renewed military activity involving Iran and focused on gains in technology shares and record closes on Wall Street. South Korea's Kospi jumped more than 3% to close at 8,476.15. Japan's Nikkei 225 was up 2.53%, ending the trading day at 66,329.5, while the Topix rose 1.41% to a new record high of 3,957.17. In Australia, the S&P/ASX 200 rose 1.62% to close at 8,731.7. Hong Kong's Hang Seng index added 0.55% in the final hour of trade, while the CSI 300 lost 0.45% to 4,892.12.
The divergence between buoyant Asian indices and India's sharp decline is notable and reflects a specific domestic vulnerability: India, as one of the world's largest crude oil importers, is disproportionately exposed to the inflationary and fiscal consequences of elevated energy prices. When oil-related anxiety spikes, India's markets tend to underperform regional peers more acutely than most.
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AMERICAN MARKETS
Wall Street continued its remarkable run in Thursday's session, with technology stocks resuming their leadership role following a blowout earnings outlook from a key enterprise software player.
The S&P 500 gained 0.58% to close at a record 7,563.63, while the Nasdaq Composite rose 0.91% to 26,917.47, with both indexes hitting intraday all-time highs. The Dow Jones Industrial Average was higher by 0.05% at 50,668.97. Tech stocks rallied after a strong earnings outlook from Snowflake revived enthusiasm around the AI trade.
Microsoft, Oracle, and Palantir each gained between 3% and 4%, driven by strong AI software and infrastructure momentum. Snowflake surged 30% on its strong quarterly outlook. On the other hand, Nvidia fell 1% and Salesforce dropped 2% following its own results. Reports of a 60-day memorandum between Washington and Tehran to extend the ceasefire and gradually restore energy exports from the Persian Gulf also provided a tailwind for sentiment, with bond yields easing as energy prices pared their rebound.
Dell Technologies announced a $9.7 billion Pentagon software deal and reported its fastest sales growth since relisting on the NYSE, with revenue of $43.84 billion — an 88% year-over-year increase that far exceeded estimates. Its data centre and server business grew 181% year-over-year, representing nearly two-thirds of total revenue.
Friday's pre-market US futures showed the S&P 500 and Nasdaq broadly holding near Thursday's record closes, with the Dow slightly firmer, suggesting Wall Street's appetite for risk remains intact ahead of the Memorial Day weekend.
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CRUDE OIL
Energy markets on Friday were a study in volatility, with prices whipsawing between ceasefire optimism and fresh military escalation headlines before settling into a cautious decline.
Crude oil prices are under pressure on Friday after reports of a preliminary agreement between the US and Iran eased concerns over inflation and the energy crisis. US WTI crude oil futures are trading below $88 per barrel and Brent crude is slipping below $92 per barrel. Washington and Tehran are reportedly set to extend their ceasefire by 60 days and begin talks over Iran's nuclear programme, while also considering unrestricted shipping through the Strait of Hormuz.
However, the earlier part of Thursday's session told a different story: Brent crude futures climbed toward $97 per barrel on Thursday, rebounding as renewed hostilities between the US and Iran weakened expectations for a near-term peace agreement. US forces reportedly struck an Iranian military site, while Iran's Revolutionary Guard said it had targeted a US airbase. Washington and Tehran remained at odds over major sticking points, including Iran's insistence on maintaining control of the Strait of Hormuz and preserving its nuclear programme.
The see-saw movement in crude is emblematic of the binary risk facing energy markets: a credible, lasting peace deal could send Brent toward the $75–80 range within weeks, while a breakdown in talks risks re-testing the $100+ levels seen in April. For India, the current zone of $88–96 represents a manageable but elevated import burden — one that continues to bear on the current account deficit, retail inflation, and the Reserve Bank of India's rate calculus.
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GOLD AND SILVER IN INDIA
Precious metals retreated modestly on Friday as the prospect of a US-Iran ceasefire extension tempered safe-haven demand, even as geopolitical tensions kept a floor under prices.
Gold prices in India remained elevated today, reflecting continued strength in global bullion markets and steady investor demand for safe-haven assets. The average price of 24-carat gold is currently around ₹15,655 per gram, which translates to nearly ₹1,56,550 per 10 grams. Meanwhile, 22-carat gold, widely used in jewellery, is trading at approximately ₹14,350 per gram across major Indian cities. In the international market, spot gold is hovering near $4,539.50 per troy ounce, supported by geopolitical uncertainty, inflation concerns, and cautious global market sentiment.
MCX gold is trading marginally lower at near ₹1,56,500 per 10 grams, while MCX silver slipped nearly 1% to hit around the ₹2,68,000 mark. Spot gold is struggling to hold around $4,500 per ounce after hitting a two-month low in the prior session, while spot silver continues to be volatile and trade a little over $75 per ounce. There is a calm in selling pressure on Friday after reports of a preliminary agreement between the US and Iran cooled off concerns over inflation and the energy crisis.
Silver faced heavier selling, with MCX prices falling nearly 2% to ₹2,65,950 per kg due to geopolitical tensions in the Middle East, a stronger US dollar, and rising global bond yields. Physical market silver is trading near ₹2,74,900 per kilogram in the domestic bullion market.
For long-term bullion investors, the medium-term outlook for gold remains constructive. With PCE inflation in the US rising to a near three-year high and the Federal Reserve under pressure, the case for gold as an inflation hedge has only strengthened. Any renewed escalation in the Gulf would likely push spot gold back through the $4,600 mark and drive domestic prices toward ₹1,60,000 per 10 grams.
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CURRENCY MARKET — RUPEE AND KEY PAIRS
The Indian rupee remained on the back foot through Friday's session, pressured by the combination of a stronger dollar, elevated crude oil import demand, and month-end rebalancing flows from foreign institutional investors.
As of today, the Euro is trading at ₹111.10 against the rupee, the Japanese Yen at ₹0.5988 per yen, and the British Pound at ₹128.11 per pound. The US Dollar is quoted at approximately ₹95.80 against the rupee , with the currency oscillating in a tight band during the session. The USD/INR exchange rate had risen to 96.09 on May 28, up 0.32% from the previous session. Over the past month, the Indian rupee has weakened 1.24%, and is down by 12.57% over the last 12 months.
For today, May 28–29, one US Dollar is equal to approximately ₹96.26, with the day's expected range between ₹95.69 and ₹96.66, representing a 0.59% change from the prior session.
The RBI's active presence in the forex market continues to limit disorderly depreciation, though the central bank's tools are being tested by the sustained pressure of a high crude import bill and episodic FII outflows. Analysts broadly expect the rupee to consolidate in the ₹95–97 range through June, with any sustained oil price decline or confirmed ceasefire being the key upside catalyst.
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WEEK IN REVIEW AND OUTLOOK FOR JUNE
May 2026 will be remembered as an extraordinarily volatile month for global markets — one shaped entirely by the US-Iran conflict and its cascading effects on energy, currencies, and risk sentiment worldwide. Indian equities, after a promising start to the year, have been knocked back sharply by the dual shock of $100+ crude oil and a depreciating rupee. The Nifty has now shed approximately 1,800 points from its April peak and is trading well below the 24,000 psychological level.
Looking ahead to June, the trajectory of the US-Iran negotiations will remain the single most important macro variable. A formalised 60-day ceasefire extension, if confirmed and credible, could be a powerful catalyst for a relief rally — reducing crude prices, firming the rupee, and encouraging domestic institutional buying that has been on the sidelines. Conversely, a collapse of talks would expose Nifty to a test of the 23,200–23,000 support band.
On the domestic front, investors will closely track Q4FY26 earnings, which continue to trickle in this week — results from Asian Paints, IndiGo, Glenmark Pharmaceuticals, and NMDC are due to offer insights into how India Inc. is navigating the twin headwinds of elevated input costs and demand uncertainty. The RBI's next policy meeting in June will also be pivotal: with PCE inflation in the US rising and crude still elevated, any signal of a change in India's accommodative stance could add to near-term volatility.
For now, markets head into the weekend with more questions than answers — and the only certain thing is that the Strait of Hormuz will remain the most consequential body of water in global finance until a durable peace framework takes hold.
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*All data and prices as of market hours on Friday, 29 May 2026. Commodity and currency prices are indicative and sourced from published market data platforms. This article is for informational purposes only and does not constitute investment advice. Past market performance is not indicative of future results.*