Benchmark indices Nifty and Sensex opened the session on a weak note on Monday, June 2,3 as escalating tensions in the Middle East spooked global markets. The US strike on three Iranian nuclear facilities has reignited fears of a wider conflict, with Iran’s parliament now backing the closure of the Strait of Hormuz, a key oil transit route, raising the risk of a fresh spike in crude prices. All sectoral indices opened lower.

At about 10:10 am, the Sensex was down 837.93 points or 1.02 percent at 81,570.24, and the Nifty was down 257.35 points or 1.02 percent at 24,855.05. About 1237 shares advanced, 2010 shares declined, and 172 shares remained unchanged.

Following the development, oil prices hit a five-month high and crossed over $80 per barrel. Experts suggest further price gains amid mounting fears that an Iranian retaliation may include a closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows.

"If Iran targets and damages the US defence facilities in the region or seriously hurts US military personnel, the US response can be huge, and this might further worsen the crisis," Aishvarya Dadheech of Fident Asset Management told a Source.

Market experts also say that even though the possibility of the closure of the Hormuz Strait is a threat, it is unlikely that it will materialise. "The fact is that the closure of the Hormuz Strait will harm Iran and Iran’s friend China more than anyone else. The market construct continues to favour a ‘buy on dips’ strategy," says V K Vijayakumar, Chief Investment Strategist at Geojit Investment.

Sectoral indices on the NSE opened lower on Monday, signalling broad-based weakness across the market. Nifty IT was the worst hit, shedding 1.28 percent, followed by Consumer Durables and Realty, which slipped 0.89 percent and 0.84 percent, respectively. Losses were also seen in Metal (-0.77%), Energy (-0.71%), and Private Bank (-0.69%). Nifty Bank and Auto declined 0.60 percent and 0.58 percent, respectively. Market volatility ticked higher, with India VIX rising 3.58 percent to 14.16. The broader market also weakened, as the Nifty Midcap 100 dropped 0.57 percent and the Smallcap 100 fell 0.67 percent.

Small finance banks rose up to 4 percent as the RBI revised priority sector lending (PSL) norms, effective FY26, a structural positive. The new guidelines lower the PSL target to 60 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher. According to the brokerage, this change will enhance portfolio flexibility and ease compliance, potentially boosting the long-term growth prospects of SFBs.

Shares of Hero MotoCorp slipped almost 2 percent after the transport ministry made anti-lock braking systems (ABS) mandatory for all new scooters and motorcycles. Nomura expects two-wheeler demand to take a hit of 2–4 percent as the government moves to make Anti-lock Braking Systems (ABS) mandatory across all domestic models, including entry-level variants.

From a technical perspective, a firm close above 25,250 could reinvigorate upward momentum, paving the way for a potential climb toward the 25,500 region. On the downside, any meaningful weakness would only surface if the index breaches 24,700 — until then, pullbacks are likely to be met with accumulation.

Bharat Electronics, Nestle, ONGC, Bharti Airtel, and Cipla were the top gainers on the Nifty. Laggards on the index included Infosys, Shriram Finance, HUL, HCL Tech and Power Grid Corp.