Indian stock markets dive amid Middle East escalation

Indian stock markets dive amid Middle East escalation Published June 8, 2026last updated June 8, 2026What you need to know - India's Sensex and Nifty traded 0.7% lower an hour after opening - Markets are reacting to Middle East tensions, higher crude prices and possible Fed hikes Here's a roundup of the biggest headlines from India on Monday, June 8, 2026: 'We will tackle it': India's commerce minister on fresh US tariffs Days after the Trump administration proposed a new 12.5% tariff on Indian goods, Indian Commerce and Industry Minister Miyush Goyal said there was no need to worry and that "we will tackle it." Goyal made the comments at an event hosted by news outlet The Financial Express on Sunday. Last week, the US Trade Representative (USTR) said 60 countries had failed an investigation into the prohibition of import goods made with forced labor. India was one of those countries, falling into the 12.5% proposed tariff category. This comes as India is already negotiating a final trade deal with the US after a 50% tariff was imposed on Indian goods. That was one of the highest tariffs levied on any country by the Trump administration, straining ties between New Delhi and Washington. However, the Indian minister downplayed the threat. "The (Section 301) investigation is directed at a particular country," Goyal said, without naming China, according to Financial Express. "We will protect India's interests, and I'm very confident that the (India-US trade) deal will come through. It'll be a good deal," he said. Diplomatic ties between New Delhi and Washington have been tense over the last year as a result of Trump's insistence on brokering peace between India and Pakistan, massive tariffs partly over India's import of Russian oil, and a series of less-than-friendly remarks towards India. Monsoons hit Kerala, IMD warns of floods and mudslides India's national weather agency has warned residents of Kerala about the risk of floods and landslides as monsoons hit the southern state. The India Meteorological Department (IMD) issued an orange alert for some districts and a yellow alert for others. The weather agency grades heavy rainfall in India on a scale of green, yellow, orange, and red levels. Yellow means 'watch,' while orange means 'alert,' as per the IMD website. Heavy rainfall is likely to continue in Kerala and the Lakshadweep islands for the next week. Authorities warned that the rain could trigger flash floods, waterlogging, and mudslides in certain pockets. Monsoons are a vital part of India's weather system and critical to Indian agriculture and the success of crops. Indian markets fall over crude, possible Fed hike and Middle East escalation Indian equities opened deep in the red on Monday as the two benchmark indices — the National Stock Exchange's Nifty 50 and Bombay Stock Exchange's Sensex –— fell over 1%. The fall was largely expected due to escalating tensions in the Middle East, rising crude oil prices, which India is particularly sensitive to, and rising bets on a US Federal Reserve rate hike. The Sensex opened 1.1% lower, falling about 800 points, while the Nifty opened 1.2% lower, falling over 280 points. Both indices partially recovered within the hour but were still trading about 0.7% lower. India was among the several Asian markets facing losses on Monday morning. This came as Iran and Israel fired missiles at each other, dampening any hopes of a peace deal brokered by US President Donald Trump. Japan's Nikkei fell 3.4% while South Korean Kospi was down 6.81%. Meanwhile, the global Price of Brent crude — a key import for India — rose 2.4 % to $95.32 per barrel. Possible Fed hike weighs on Indian market Global analysts are betting on a US Fed rate hike after the latest US Jobs Report showed the economy was strengthening despite energy price strains from the Middle East conflict. "That combination makes policy tightening by the Fed later this year increasingly probable ... we now expect the FOMC to deliver two 25-basis-point rate hikes later this year," said Jonas Goltermann, chief markets economist at Capital Economics. A Fed hike will likely prompt global investors to withdraw capital from emerging markets like India and inject it into US markets, offering higher returns. Welcome to our coverage Good morning! Welcome to DW's India news blog. This is Mahima Kapoor from the New Delhi Bureau, here to bring you the biggest headlines of the day with context that puts the news into perspective. India's stock markets fell sharply on Monday amid multiple global triggers, including escalating tensions in the Middle East and higher crude prices. The country's retail investors, aka regular folks who have pumped in an average of $2 billion every month for the last five years, are likely facing the worst of this pain. Monsoon rainfall is hitting the southern state of Kerala, with the national weather agency issuing orange and yellow alerts in different parts. Authorities warned of landslides and flooding. On the trade front, India's commerce minister has assured citizens that the government will tackle the new 12.5% Trump tariffs that were proposed last week over alleged failure to prohibit goods made from forced labor. India is currently negotiating a final trade deal with the US after the 2025 tariffs. Many fear that the new levies could worsen the already strained ties between New Delhi and Washington. Stay tuned as we break down all of this, and more.