SRINAGAR: Indian equity markets have suffered one of their steepest routs in over a year, with nearly Rs 31 lakh crore in investor wealth erased since fresh hostilities between the United States, Israel, and Iran erupted on February 28, a crisis that has sent crude oil soaring, rattled foreign investors, and cast a long shadow over India’s economic outlook.
On Monday alone, around Rs 12.78 trillion was wiped off market capitalisation in a single session. The BSE Sensex plunged 2,299 points (2.91 percent) to trade at 76,619, while the NSE Nifty 50 tumbled 714 points (2.92 percent) to 23,736 — levels not seen since the height of last year’s volatility.
The trigger is unmistakable: Brent crude has surged more than 26 percent in a week, briefly breaching $117 per barrel, its highest since 2022, as fighting raised fears of disruptions to the Strait of Hormuz, through which a significant share of the world’s oil supply flows.
For India, which imports roughly 85–90 percent of its oil needs, the blow is especially sharp. Economists warn that every $1 rise in crude oil adds approximately Rs 16,000 crore to the country’s import bill.
The rupee tumbled to an all-time low of 92.35 against the US dollar, with the Reserve Bank of India reportedly intervening to prevent a sharper slide. Foreign Portfolio Investors have pulled out approximately Rs 21,000 crore over just four trading sessions, reversing the bulk of the record Rs 22,615 crore they had poured in during February.
“The unknown factor now is how long the conflict will last. This uncertainty will also weigh on FIIs, who have again turned aggressive sellers,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Selling has been broad-based, State Bank of India slipped over 5 percent , ICICI Bank dropped 4.5 percent , and Larsen and Toubro declined nearly 5 percent . Oil marketing companies — BPCL, HPCL, and Indian Oil — fell more than 8 percent as surging input costs threaten their margins. IndiGo shed over 7 percent on fears of soaring jet fuel costs.
Mid- and small-cap stocks bore the brunt of the rout, with the BSE MidCap and SmallCap indices falling 3 percent and more than 3 percent , respectively.
The lone bright spot: defence stocks, which rose roughly 6 percent on expectations that geopolitical tensions would drive up military spending globally.
Analysts warn that if crude remains above $100 per barrel for an extended period, the pressure on India’s inflation, fiscal deficit, and currency could become severe. With Iran’s new supreme leader signalling no willingness to de-escalate, markets brace for continued turbulence.
For now, Dalal Street’s fate remains firmly tied to the trajectory of war in the Middle East.
