Stock markets crashed on Monday, with the Sensex and Nifty falling up to 1.7% as oil prices surged amid fading hopes of a US-Iran peace deal, along with other factors that spooked investors.The Sensex dropped around 1,313 points to close at 76,015, while the Nifty 50 fell 360 points to end the session at 23,816 on Monday. The selloff wiped out nearly Rs 6 lakh crore from the total market capitalisation of all companies listed on the BSE, bringing it down to Rs 467 lakh crore.Titan shares crashed 7% to lead losses on Sensex, while the shares of IndiGo, SBI, Bharti Airtel, Eternal, Reliance Industries and NTPC followed, tumbling 2.5-5%. Bucking the trend, Sun Pharma and Hindustan Unilever shares gained around 1% each. Meanwhile, India VIX, which measures market volatility, surged more than 10% to 18.55The bearish sentiment was broad-based, with the Nifty Midcap 100 and Nifty Smallcap 100 indices declining around 1% each. Nifty Consumer Durables and Nifty Realty crashed 4% and 3% respectively to lead losses among the sectoral indices. Around 2,366 stocks declined on NSE, while 963 advanced and 93 remained unchanged.“The market will face pressure from two headwinds today. First, hopes of a resolution to the West Asia crisis have faded again following President Trump’s rejection of Iran’s proposal. Consequently, Brent crude has surged to $105, potentially aggravating the current account deficit. Second, PM Modi’s appeal to the nation to curb the consumption of petrol, diesel, gold, chemical fertilisers and edible oil, and to refrain from avoidable foreign travel, is a crisis-management response to the current account deficit problem caused by high crude prices. This call for austerity has slightly negative implications for economic growth in FY27,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.Industries linked to the austerity call — including petroleum, fertilisers, gold, air travel, hotels and related sectors — are likely to face sentiment-driven pressure, the analyst said. He added that sectors such as pharmaceuticals, which are unlikely to be impacted, may remain relatively resilient.Here are the key factors impacting markets today:1) Trump rejects Iran’s peace proposalUS President Donald Trump on Sunday rejected Iran’s response to a US proposal for peace talks, dimming hopes for an end to the month-long conflict in the oil-rich Middle East. The conflict has caused widespread damage in Iran and Lebanon, disrupted maritime traffic through the Strait of Hormuz and triggered a sharp rally in global energy prices.Days after the US sent a peace proposal to Iran, Tehran responded on Sunday with conditions focused on ending the conflict across the region, particularly in Lebanon, where Israel is battling Iran-backed Hezbollah militants. Iran’s proposal also demanded compensation for war damages and reaffirmed Iranian sovereignty over the Strait of Hormuz, according to Iranian state TV.Iran further asked the US to end its naval blockade in the Strait of Hormuz, guarantee no further attacks, lift sanctions and remove restrictions on Iranian oil sales.“I don’t like it — TOTALLY UNACCEPTABLE,” Trump wrote on Truth Social, without giving further details.2) Oil prices surgeFollowing these developments, oil prices climbed sharply. Brent crude jumped more than 2% to $104 per barrel, while WTI crude futures surged nearly 3% to $98 per barrel on Monday afternoon.This comes as traffic through 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 — remains disrupted.3) PM Modi’s call to conserve energyPrime Minister Narendra Modi on Sunday urged citizens and businesses to conserve fuel and revive work-from-home practices to reduce fuel consumption amid rising energy prices. He said the country must save foreign exchange by reducing petrol and diesel usage.“In the current situation, we must place great emphasis on saving foreign exchange,” he said while virtually inaugurating and laying the foundation stone for development projects worth around Rs 9,400 crore in Telangana. He added that imported petroleum products should be used only when necessary, as this would not only save foreign exchange but also reduce the adverse impact of war.Following his remarks, several heavyweight jewellery, travel and related stocks declined, further dampening sentiment.4) Rupee weakens to record low closing levelThe Indian rupee recorded its sharpest decline in more than a month, falling 0.9% to a record low closing level of 95.31 against the US dollar. The decline came amid surging oil prices and PM Modi’s call for fuel conservation.PM Modi’s speech has raised concerns about the pressure of a higher import bill on India’s economy and currency stability, especially with elevated crude prices continuing to strain the external balance, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. “The speech has raised concerns about the pressure of a higher import bill on India’s economy and currency stability, especially with elevated crude prices continuing to strain the external balance,” he said.“While the government’s message was aimed at promoting long-term self-reliance and reducing unnecessary imports, the immediate market reaction remained cautious, which weighed on sentiment in the currency market. In the near term, rupee is expected to trade in a range of 94.75–95.75, and a sustained close below 95.50 could open the path towards the 96.00 level,” he added.5) Persistent FII sellingForeign investors remained net sellers of Indian equities for the fourth consecutive session on Friday, offloading shares worth Rs 4,111 crore, according to NSE data. Although the data does not reflect Monday’s activity, persistent FII selling has weighed on market sentiment.“Foreign Institutional Investors (FIIs) remained net sellers last week, selling Rs 110.7 billion worth of equities, based on provisional exchange data. Domestic Institutional Investors (DIIs), however, continued to support the market, emerging as net buyers with investments totalling Rs 213.9 billion. Geopolitical tensions, elevated oil prices and a weaker rupee have led to sustained FII selling over recent months. FIIs have remained net sellers in the current calendar year, offloading Rs 2,518.2 billion worth of equities,” said Pabitro Mukherjee, Associate Vice President – Research at Bajaj Broking.6) Bond yields riseUS Treasury yields edged higher amid the latest geopolitical developments. The yield on the benchmark US 10-year Treasury note rose to 4.39%, while the 30-year bond yield climbed to 4.967%.The 2-year Treasury yield, which typically tracks interest rate expectations for the Federal Reserve, rose to 3.924%.(With inputs from agencies)(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of The Economic Times)