Indian equity markets suffered a sharp selloff on Thursday, with the BSE Sensex plunging over 2,100 points and the Nifty50 slipping below 23,150, as surging crude oil prices, a hawkish US Federal Reserve, and a dramatic crash in HDFC Bank shares combined to batter investor sentiment.

Brent crude crossed $110 per barrel — driven by escalating Middle East conflict and the continued closure of the Strait of Hormuz — while US Federal Reserve Chair Jerome Powell held benchmark rates steady at 3.50–3.75 per cent, citing persistent inflation concerns. The Fed revised its year-end inflation projection upward to 2.7 per cent from 2.4 per cent, signalling only one rate cut this year. Powell acknowledged significant uncertainty over the economic fallout from geopolitical tensions and President Trump's shifting tariff stance.

QatarEnergy reported extensive damage to Ras Laffan's LNG processing hub following Iranian missile strikes, while the UAE shut down gas facilities after intercepting missiles early Thursday — developments that sent crude surging and rattled global markets.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments, warned that if Brent remained above $110 for an extended period, it would have negative implications for India's macroeconomic fundamentals, GDP growth, and corporate earnings in FY27.

HDFC Bank shares tumbled nearly 8 per cent after part-time Chairman Atanu Chakraborty resigned, citing practices at the bank over the past two years that were "not aligned with his personal principles and ethical standards." The Reserve Bank of India approved the appointment of former CEO Keki Mistry as interim part-time chairman. Given HDFC Bank's significant weight in benchmark indices, the stock's decline amplified broader market losses considerably.

Within minutes of opening, the selloff erased over Rs 10 lakh crore from BSE's total market capitalisation, bringing it down to Rs 429 lakh crore. All NSE sectoral indices opened in the red, with Nifty Realty the worst performer at over 3 per cent down, followed by Nifty Auto and Nifty Private Bank. Foreign institutional investors remained net sellers for the 14th consecutive session, offloading shares worth Rs 2,714 crore on Wednesday alone.

Global markets offered no comfort, with the S&P 500 falling 1.36 per cent, the Nasdaq dropping 1.46 per cent, and Japan's Nikkei sliding 2.5 per cent overnight.

The Indian rupee weakened to a record low of 92.63 against the US dollar, with analysts at LKP Securities projecting the currency to remain under pressure in a range of 92.25–92.95 in the near term, as elevated crude prices and Hormuz disruptions keep India's import bill uncomfortably high.