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Indian shares fall to two-month lows due to oil price spike and Asia selloff

Indian shares dropped on Monday, following a sharp sell-off in Asian markets. Crude prices also spiked as a result of the escalation in the Middle East conflict. Brent crude rose 4.3% to $97 per barrel as fears grew of a wider conflict, and disruptions in oil supplies.

India's benchmark Nifty50 fell 1.04%, to 23,123. The BSE Sensex dropped 0.97%, to 73.524.26, both blue-chip indices closing at two-month-lows.

Financials and IT, which are high-weighted sectors, lost 1% each, while the other 15 major sectors gained.

Small-caps and midcaps both declined by 1.9%?and 1.4% respectively.

The MSCI Asia ex Japan index fell 3.5%. South Korea's KOSPI dropped 8.3%. Japan's Nikkei declined 3.9%.

Rajesh Palviya is the head of Axis Direct's research. He said that "a sharp drop in stocks linked to technology, semiconductors and AI, as well as high crude prices due to Middle East conflict" weighed on sentiment. Rising expectations of a U.S. interest rate hike by 2026-end, after a stronger-than-expected May ?jobs report, also weighed on markets.

Palviya stated that "the data has reignited fears that the Federal Reserve may maintain a hawkish position?for a longer period of time, leading to higher bond yields as well as renewed risk aversion in global equities."

India announced measures to help the rupee recover after a record number of?foreign capital outflows and high oil prices caused the economy to be strained. Wipro shares fell 8.4%, to a low of three years after its record buyback date and the?global tech rout. InterGlobe Aviation dropped?2.7% following Bloomberg News' report that the?carrier will not receive the entire batch of nine Airbus A321XLRs this year. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Subhranshu Sahu, Mrigank Dhaniwala and Nivedita Bhattacharjee)

(source: Reuters)