Indian equity markets are entering a week defined by heightened uncertainty, with benchmark indices extending losses amid a confluence of macro and geopolitical pressures.
The Sensex fell 2.68% to close at 76,059.77, while the Nifty declined 2.33% to 23,767.45, reflecting broad-based selling pressure as investor sentiment cooled.
The primary driver of the downturn is a sharp recalibration of expectations regarding US monetary policy.
Market participants are increasingly pricing in multiple Federal Reserve rate hikes this year, a significant shift from just a week ago when traders had assigned a high probability to a more dovish stance.
This repricing of rate expectations is weighing heavily on emerging market equities, including India, as the prospect of tighter global liquidity conditions dampens risk appetite.
Compounding the macro headwinds is renewed geopolitical friction between the US and Iran.