Indian equity markets traded lower in early trade on Tuesday as renewed geopolitical tensions in West Asia weighed on investor sentiment. Higher crude oil prices and rising market volatility prompted cautious trading, leading to declines in both benchmark indices.

At around 9:30 a.m., the BSE Sensex was down 290.77 points, or 0.37 percent, at 77,325.63, while the NSE Nifty 50 fell 79.50 points, or 0.33 percent, to 24,131.50.

The primary trigger for the market weakness was the escalation in tensions between the United States and Iran. The U.S. military reportedly carried out a third consecutive night of strikes against Iran, while President Donald Trump reinstated a blockade on Iranian shipping and proposed a 20 percent fee for vessels seeking protection through the Strait of Hormuz. These developments have intensified concerns over regional stability and global energy supplies.

Crude oil prices reacted sharply to the geopolitical developments, with Brent crude briefly climbing above $85 per barrel, its highest level since the memorandum of understanding signed between the United States and Iran on June 17. The renewed tensions around the Strait of Hormuz, a key global oil transit route, have heightened fears of supply disruptions, leading to increased uncertainty in energy markets.

The rise in crude oil prices is particularly significant for India, one of the world's largest crude oil importers, as sustained higher energy costs could increase inflationary pressures, widen the trade deficit, and impact corporate profitability.

Adding to the cautious sentiment, the India VIX, which measures expected market volatility, rose around 3 percent to nearly the 14 level. The increase in the volatility index indicates that investors are anticipating greater market fluctuations amid the evolving geopolitical situation and its potential impact on the global economy.