Dear Friends, Here is the Market Wrap 08.07.26   Sharp broad selloff as US–Iran conflict drives crude up 6%;   What moved?   The cap-curve told a clear risk-off story: Nifty 50 falling (−2.12%), Nifty Smallcap 100: (-2.24%) while Nifty Midcap 100: (-1.55%). Market breadth was decisively negative — only 698 stocks advanced against 2,631 declines (A/D ratio: 0.265), confirming this was broad-based selloff.   Macro backdrop US President Trump declared the ceasefire with Iran effectively over after mutual strikes. Hence the Brent spike to $78.81 (+6.34%) .   Flows & positioning FII cash: net buyer of ₹1,962.8 cr. DII cash: net buyer of ₹790.16 cr. But the derivatives book tells the actual directional story.   Derivatives India VIX spiked 26.04% to 14.68 — a large single-day volatility jump. FII index-futures net short position deepened sharply: from −238,838 contracts yesterday to −268,586 contracts today, an addition of ~29,748 short contracts. Simultaneously, FII index-put net long OI surged by 102,881 contracts to 546,664, while they cut index-call shorts by 94,630. This is an unambiguous hedged/bearish posture in derivatives, running alongside modest cash buying. USD/INR closed at 95.545 (+0.62%) — higher crude import demand for dollars + geopolitical risk-off. The DXY (dollar index) was up only mildly (+0.10% to 101.08). On viewing foreign flows via the currency channel: the 1-year USD/INR forward premium rose 10.25 paise to 273.5 paise (2.86% annualised). US 10-year Treasury: 4.585%, up 6.2 bps due to Crude-driven inflation expectations. The India 10-year G-Sec moved in lockstep: 6.766%, up 7.4 bps. The US–India spread sits at 218 bps.   The Sectoral Moves   The heaviest losses fell where the crude shock bites hardest via two distinct channels: Nifty PSU Bank (−2.72%) and Nifty Bank (−2.51%): partly driven by India's 10-year G-Sec yield rise - PSU banks carry large government bond portfolios — rising yields generate mark-to-market losses. The broader growth/credit-quality concern from higher inflation added to the pressure. Nifty Chemicals (−2.67%) and Nifty FMCG (−2.49%): Crude is both a direct feedstock in specialty chemicals and a key input (packaging, petrochemicals, logistics) for FMCG companies. A 6%+ single-day crude move reprices margins materially for both sectors. Nifty Oil & Gas (−2.23%) and Nifty Auto (−2.23%): Downstream OMCs face margin compression and Autos face demand headwinds from higher fuel prices. The relative outperformers were Nifty Metal (−0.91%) and Nifty Pharma (−0.97%). Metal stocks are partially cushioned by commodity price tailwinds when geopolitics spikes, and pharma benefits from its defensive character and dollar-revenue exposure. Nifty IT (−1.37%) also held above the index average for the same export-revenue reason. Gold: (−2.09%), Silver: (−5.01%). The fall in gold despite a clear geopolitical flare-up is notable. This typically happens when traders liquidate gold positions to cover margin calls elsewhere.   Fingers Crossed again with this dramatic turn around!