May 12 (Reuters) - Indian stocks tanked on Tuesday, wiping off about $115 billion from the market value of firms listed on the National Stock Exchange, as fading hopes for a U.S.-Iran deal worsened the outlook for Asia's third-largest economy.

The country of 1.4 billion people braced for tough measures after Prime Minister Narendra Modi urged lower use of fuel and fertilisers and curbs on overseas travel and imports, as a surge in global energy prices pressures foreign exchange reserves.

The rupee, Asia's worst-performing currency in 2026 so far, fell to a record low as crude hovered near $107 per barrel and outflows continued unabated, hammering stocks across sectors.

"The pressure on equities is now being amplified by a macro 'triple hit' of higher crude prices, rupee slipping to record low and continued aggressive foreign outflows," said Hariprasad K, founder of Livelong Wealth.

There is a "broader confidence shock as investors are interpreting recent policy messaging and austerity-oriented commentary as an indication of a tougher macroeconomic environment ahead," Hariprasad said.

India, the world's third-largest oil importer and consumer, meets more than 90% of its crude oil needs and about half of its natural gas demand through imports.

The country has yet to raise prices of fuels used by the public, but the oil minister said on Tuesday the government would at some stage need to assess how long state-run refiners can sustain losses from selling fuels below market prices.

India's Nifty 50 fell 1.83% to 23,379.55, while the BSE Sensex shed 1.92% to 74,559.24, logging their worst day in six weeks and taking their losses over two sessions to about 3.4%.

The benchmark indexes are the laggards among Asian peers, which fell 1.3% after U.S. President Donald Trump said a ceasefire with Iran was "on life support".

Tehran has rejected a U.S. proposal to end the conflict and stuck to a list of demands the U.S. president described as "garbage".

IT TAKES A BEATING

Shares of Indian IT firms fell 3.7% to a three-year low over concerns of AI disrupting their traditional business models, and ahead of U.S. inflation data that could revive rate-hike concerns.

All 16 major sectors declined, while small-caps and mid-caps dropped 3.2% and 2.5%, respectively.

On the flip side, ONGC and Oil India climbed 4.8% and 7.7%, respectively, after CLSA said the royalty cuts on crude and gas production benefit them.

($1 = 95.6275 Indian rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sherry Jacob-Phillips and Mrigank Dhaniwala)

By Bharath Rajeswaran