Markets slip 1.3% as U.S. rejects Iran’s response to deal and PM Modi cautions rupee drop

Investors got back to selling of Indian stocks aggressively after a few weeks of calm as U.S. President Donald Trump rejected Iran’s response to the peace proposals and Prime Minister Narendra Modi “advised” citizens to cut buying forex depleting goods and services.

Nifty 50 and Sensex fell 1.5% and 1.7% closing at 23,815.5 and  76,015.28-points respectively, responding to the return of tensions between U.S. and Iran which led to India’s caution.

The domestic currency depreciated 0.7% closing at ₹95.15 on o as compared to ₹94.5 on Friday (May 8, 2026), going by spot market data from Clearing Corporation of India. Global oil prices increased, as Brent crude futures were up 2.2% , crossing $103 a bbl.

Nifty and Sensex were trading sideways — with no windfall gain or loss–on a daily basis as global geo-political risks showed some signs of becoming benign. This however did not last, after

Mr. Trump posted: “just read the response from Iran’s so-called ‘Representatives.’ I don’t like it — TOTALLY UNACCEPTABLE!” on Truth Social without disclosing the details.

Closer home at a public meeting at Telangana, Mr.Modi advised that citizens cut consuming imports, even going as far as advocating Work From Home, and appealing citizens to not buy gold jewellery for the next one year. “Petrol-diesel has become so expensive across the world. It is the responsibility of all of us that the foreign exchange spent on purchasing petrol-diesel should also be saved by conserving petrol-diesel…I would appeal to people not to buy gold for weddings for one year,” he said.

“Indian equities are expected to remain cautious in the near term amid escalating geopolitical tensions, with stock- and sector-specific action likely to continue alongside the final leg of the Q4FY26 earnings season. Elevated crude oil prices, rupee weakness, and sustained Foreign Institutional Investor selling are expected to keep overall market sentiment subdued,” said Siddhartha Khemka – Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd.