Domestic equity markets declined on Thursday, weighed down by a surge in Brent crude prices and escalating geopolitical tensions, as the US and Iran showed no signs of returning to the negotiating table.

Reports that the US military is set to brief President Donald Trump on fresh military options against Iran further unsettled sentiment.

The Sensex, after falling as much as 1,238 points, or 1.6 per cent, pared losses as crude prices eased during the session to end at 76,914, down 583 points, or 0.8 per cent. The Nifty closed at 23,998, lower by 180 points, or 0.7 per cent. Brent crude futures, after climbing to a wartime high of $126 per barrel, retreated to trade below $113.

The markets recovered substantial losses seen during the peak of the conflict last month. A three-week ceasefire between the US and Iran and the absence of negative surprises during the earnings season helped sentiment.

Despite Thursday’s decline, benchmark indices posted strong monthly gains. The Sensex rose 6.9 per cent and the Nifty 7.5 per cent in April — their best performance since December 2023. This follows a sharp correction in March, when the Sensex and Nifty had fallen 11.5 per cent and 11.3 per cent, respectively, marking their steepest monthly drop since March 2020.

The ongoing US-Iran conflict has disrupted flows through the Strait of Hormuz — a key artery that handles nearly a fifth of global oil shipments. With no visible progress towards a resolution, and reports of potential US strikes threatening to derail the fragile ceasefire, concerns over a prolonged energy shock have intensified. Since the onset of the conflict, Brent crude prices have surged 47 per cent.

Elevated crude prices have heightened worries around inflation and economic growth in India, while also exerting pressure on the currency. The rupee weakened to a record low of 94.92 against the US dollar. Several global brokerages, including HSBC and JPMorgan, have flagged rising energy costs as a key factor behind their recent downgrades of Indian equities.

“There was considerable optimism around a potential resolution following the ceasefire and initial dialogue between the two sides. However, if the US is indeed exploring new military options, those expectations may no longer hold. We could be reverting to pre-ceasefire conditions, with adverse implications for both oil prices and markets,” said U R Bhat, co-founder of Alphaniti Fintech.

Broader markets outperformed during the month. The Nifty Midcap 100 rose 13.6 per cent — its best showing since November 2020 — while the Nifty Smallcap 100 gained 18.4 per cent, the highest since May 2014. All sectoral indices ended April in positive territory, led by Nifty Realty, which surged 22 per cent.

Market breadth remained weak on Thursday, with 2,606 stocks declining on the BSE versus 1,581 advancing. The total market capitalisation of BSE-listed firms stood at ₹463.3 trillion, an increase of ₹50.9 trillion over the month.

Among Nifty constituents, Adani Enterprises emerged as the top gainer in April with a rise of 36.9 per cent, followed by Adani Ports at 26.3 per cent. On the downside, HCL Technologies was the biggest laggard, declining 10.6 per cent during the month.

“Going ahead, immediate resistance for the Nifty is seen in the 24,250–24,300 zone. A sustained move above this range could extend the pullback towards 24,450 and 24,600 in the near term. On the downside, key support is placed in the 23,850–23,800 zone,” said Sudeep Shah, head of technical and derivatives research at SBI Securities.