Indian stock markets opened in the deep red on Wednesday, with Sensex and Nifty falling around 0.8% each as rupee’s free fall and other factors dampened investor sentiment.Sensex declined more than 600 points to drop below 74,600, while Nifty 50 fell over 190 points to slip below 23,450. This came as India VIX, which measures volatility in markets, gained more than 1% to hover near 18.93 in the morning.Tata Steel, Zomato-parent Eternal, Bharat Electronics (BEL), Bajaj Finance, M&M, Maruti Suzuki, Power Grid, Hindustan Unilever, UltraTech Cement, SBI, Bajaj Finserv and Tech Mahindra shares declined up to 2% to emerge as the top losers on Sensex. Bucking the trend, TCS and Infosys shares were trading with marginal gains. The bearish sentiment was broad-based, with Nifty Midcap 100 and Nifty Smallcap 100 indices dropping around 1% each.All sectoral indices slipped into the red, with Nifty FMCG, Nifty Auto, Nifty Realty, Nifty Metal and few other indices falling more than 1% each. Around 1,879 stocks declined on NSE, which 598 advanced and 83 remained unchanged.“While fourth-quarter earnings continue to underscore the resilience of domestic economic momentum, market focus is increasingly pivoting toward mounting inflationary pressures. Concerns over potential earnings downgrades for Q1FY27 are gaining traction, driven by higher-than-anticipated WPI readings, the gradual pass-through of elevated fuel prices, and persistently firm bond yields,” said Vinod Nair, Head of Research at Geojit Investments.Key factors dampening the sentiment on Dalal Street today: 1) Rupee weakens to fresh low, inches closer to 97Rupee continued its free fall against the US dollar, hitting a fresh lifetime low of 96.8650 on Wednesday and eclipsing its previous all-time low of 96.6150 which it had hit yesterday. The currency is down 6% since the Iran war ⁠began in late February.Rupee’s weakness comes as elevated crude oil prices and continued pressure on capital flows kept the currency under stress, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. “Sustained higher crude prices are increasing concerns over India’s import bill and widening trade deficit, which is keeping sentiment weak for the rupee,” he said.“Market participants continue to prefer dollar buying and rupee selling as a hedge against ongoing volatility and external sector pressure. The broader trend remains weak, with rupee expected to trade in a range of 96.25–97.00 in the near term,” according to the analyst.2) Iran-US conflictUS President Donald Trump told lawmakers at the White House that the country will “end the war very quickly” with Iran. "There's so much oil out there, they're going to come plummeting down..We're going to end that war very quickly. They want to make a deal so badly...You are going to see oil prices plummet. They're going to come down. There's so much oil out there, they're going to come plummeting down," he said at a press conference. This came after he threatened Iran, saying the US may launch new attacks if Tehran fails to agree to some of the terms of the peace deal.Meanwhile, US Vice President JD Vance said that the Iran conflict will not become a “forever war”. “We're going to take care of business and ⁠come home,” he said during a White House briefing.Iran however scaled up its threats. “With lessons learned and knowledge we gained, return to war will feature many more surprises,” Iran’s Foreign Minister Seyed Abbas Araghchi said in a post on X.3) Oil prices hold above $110/barrelBrent crude declined marginally but remained above $110 per barrel. WTI Crude meanwhile hovered above $104 per barrel. Oil prices continued to remain elevated above $100 per barrel level amid the prolonged blockade over the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments.4) FII selling resumesForeign investors remained net sellers of Indian equities on Tuesday, selling shares worth Rs 2,457 crore on Dalal Street. This comes after a three-session buying streak during which FII bought Indian shares worth Rs 5,240 crore. However, foreign investors have mostly remained bearish on Indian markets this month so far, remaining net sellers of Indian equities in eight out of 12 sessions so far in May. 5) Global markets crashDalal Street accompanied its global peers, which only declined sharply. In Asia, South Korea’s Kospi crashed more than 2% while Japan’s Nikkei fell around 1.5%. Hong Kong’s Hang Seng and China’s Shanghai Composite dropped around 0.5% each.Wall Street closed in the deep red yesterday, with tech-heavy Nasdaq declining 0.9% and S&P 500 falling 0.7%. European markets however closed mixed on Tuesday, with UK’s FTSE and Germany’s DAX closing in the green with marginal gains.More to come...