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MUMBAI: Selling in banking heavyweights led a broad market selloff on Thursday, pulling benchmark indices sharply lower as weakness in private lenders combined with rising global risk aversion.

Financials bore the brunt of the decline, with sentiment in private banks turning cautious amid both stock-specific concerns and a wider risk-off mood. The Nifty Private Bank index was among the worst performers, second only to Nifty Realty, which fell 3.3%.

At the centre of the selloff was HDFC Bank, whose shares plunged over 8% to a 52-week low of ₹772 following an unexpected leadership change that raised governance concerns.

The bank said its part-time chairman and independent director, Atanu Chakraborty, has stepped down, with Keki Mistry appointed as interim part-time chairman for three months.

At 11:30 am, the Nifty 50 was down 2.2% at 23,246.75, while the S&P BSE Sensex fell 2.3% to 74,966.30. The broader market weakened as well, with the Nifty Midcap 100 down 2.2% and the Smallcap 250 falling 1.6%.

The selloff came against a jittery global backdrop.

Iran’s escalation, marked by strikes on critical energy assets across neighbouring West Asian nations, has triggered a sharp oil price shock and raised the risk of a prolonged period of elevated energy prices, explained Nirav Karkera, head of research and fund manager of PMS division at Fisdom. The US Federal Open Market Committee has also flagged this as an upside risk to inflation, he said.

“The combination of a deeper conflict phase and persistently higher crude prices is weighing on global markets, with a pronounced shift towards risk-off sentiment.”

Volatility surged, with India VIX rising 15% on Thursday.

Geopolitical tensions intensified after Iran stepped up retaliation following the strike on South Pars, targeting key Gulf nations including Qatar, Saudi Arabia and the United Arab Emirates (UAE). The flare-up dented risk appetite. Adding to the unease, US President Donald Trump warned Iran against further retaliation after the attack on Qatar’s Ras Laffan energy complex, sending fresh ripples across global markets.

Global cues remained negative. US equities ended sharply lower, with the S&P 500 and Nasdaq falling 1.4% and 1.5%, respectively. The weakness spilled over into Asia, with the Nikkei dropping over 3%, the Hang Seng declining 2%, the Kospi slipping 2.6%, and the Shanghai Composite down 1.3%.

Sentiment was further hit by the US Federal Reserve, which held rates steady and signalled just one rate cut this year as it assessed risks from rising oil prices and the US-Israel conflict with Iran.

Fed Chair Jerome Powell flagged uncertainty around the oil shock and noted that progress on inflation has been limited, warning that persistent tariff-led price pressures and conflict-driven energy costs may not be transient. He added that the Fed would need to see core inflation ease as tariff effects pass through the economy.

In effect, higher US inflation could keep interest rates elevated, strengthening the dollar and triggering foreign outflows from India, pressuring the rupee and equities. It also raises global borrowing costs and risk aversion, often leading to volatility in Indian markets and tighter liquidity conditions.

The dot plot showed no change, with one cut each getting signalled in 2026 and 2027, said Ionic Wealth report by Angel One.

“The pause restricts weaker dollar and therefore hurts the EM trade which will see perils of both higher energy prices and weaker currency. RBI is also likely to face similar dilemma and is now unlikely to cut in April,” the report pointed out.

Kotak Institutional Equities sees the recent correction in the market and stock prices due to the ongoing conflict between Iran and Israel-US and resultant dislocations in stock prices as an opportunity to add ‘better’ stocks, remove ‘narrative’ stocks, and reduce positions in expensive cement and consumer stocks. “A churn in portfolios may be the best option, given the circumstances.”For the past six years, Dipti has been deeply immersed in the ever-evolving world of stock markets—starting as a journalist at Informist, then establi...

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