Shortly after opening, Sensex had crashed nearly 2,500 points to hit the day’s low at 76,424.55 and Nifty 50 tumbled over 750 points to 23,698. The benchmark indices then recovered some losses. At close, Sensex was down nearly 1,353 points at 77,566, while Nifty 50 tumbled over 422 points to 24,028. The sharp selloff wiped off more than Rs 8.5 lakh crore from the total market capitalisation of all companies listed on BSE, dragging it down to Rs 441 lakh crore.
UltraTech Cement, Maruti Suzuki, Mahindra & Mahindra (M&M), State Bank of India (SBI), Adani Ports and Tata Steel shares were the top losers on the index, falling 4-5%. Bucking the trend, heavyweight Reliance Industries shares gained more than 1%.
Among the major sectoral indices on NSE, only Nifty IT closed in the green with marginal gains. Nifty Auto was the top loser, closing more than 4% lower.
Here are the key factors impacting markets today:
1) Crude prices soar above $100-mark
Crude oil prices surged to multi-month highs, crossing the $100 per barrel for the first time since 2022 when Russia had attacked Ukraine. This came as the war between Iran and the US further escalated over the weekend, triggering concerns over the prolonged closure of the Strait of Hormuz and the resulting supply disruptions.
Brent Crude surged nearly 29% to hit the day’s high at $119.46 per barrel, before paring some gains. West Texas Intermediate (WTI) crude rallied around 31% to hit the day’s high at $119.43 per barrel. However, oil prices later cooled off slightly. Brent crude was up 12.6% at $104.4 per barrel and WTI crude was up around 12% at $101.5 per barrel, as seen at 3.45 pm. The partial fall in prices came after the Financial Times reported that the Group of Seven (G7) finance ministers and the International Energy Agency will discuss on Monday a joint emergency oil reserves release, and Saudi Aramco offered prompt crude supply through a series of rare tenders.
The Strait of Hormuz continues to remain effectively shut for regular traffic after several tankers were bombed in the area. More than 20% of the world’s oil supply passes through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
While US President Donald Trump-led US administration claims that the Strait remains open and has offered to insure vessels transiting the narrow waterway, the market doesn’t seem to be convinced that Iran won’t attack any ship attempting passage.
2) The Middle East war worsens
The war between Iran and Israel-US entered its 10th day today, after escalating further during the weekend. Iran today named Mojtaba Khamenei to succeed his father, Ali Khamenei, as the country’s supreme leader, signalling that Tehran remains in charge amid the conflict. Israel has threatened to kill Khamenei’s successor, while US President Donald Trump said that the war may only end when Iran’s military and rulers have been wiped out.
The US and Israel attacked several oil depots in Iran. Videos from the attacked areas showed plumes of smoke and fire lighting up the night sky in Tehran late at night. Iran, meanwhile, targeted several other Gulf nations with drone attacks injuring many civilians.
The raging war began during the previous weekend after the US and Israel conducted military strikes against Iran, reportedly killing its Supreme Leader, Ayatollah Ali Khamenei. Iran subsequently launched retaliatory attacks across several parts of the oil-rich region. No sign of diplomatic resolution to the war has been spooking global investors this week.
3) Rupee hits all-time low
Indian rupee fell 53 paise to settle at an all-time low of $92.35 against the US dollar, as against the previous close of $91.74. This comes as oil prices continue to spike sharply. “Going ahead, dollar index movement and developments in the West Asia conflict will remain key drivers for the rupee as FII’s position gets influenced by crude rates…The currency likely to remain sensitive to global risk sentiment and capital flows,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.
4) Bond yield rises
The spike in oil prices amplified concerns that interest rates could remain elevated for longer, with the yield on the benchmark 10-year Treasury note touching its highest in more than a month.
US Treasury yields rose for a fourth straight day amid growing concerns that higher oil prices could stoke inflation and influence Federal Reserve policy. The yield on the benchmark US 10-year Treasury note climbed to around 4.2%, extending last week’s gains as the Middle East conflict intensified. The 10-year yield rose about 6 basis points to 4.19%, the highest level since February 12, after surging 17 basis points last week.
The two-year Treasury yield, which is highly sensitive to expectations around Federal Reserve policy, increased to 3.606%. Rising bond yields tend to make government securities more attractive relative to equities, potentially putting pressure on stock markets.
5) Persistent FII selling weakens sentiment
Foreign investors remained net sellers of Indian equities during the previous session, as well as the overall last week which saw a massive selloff. According to market data, FPIs net sold Indian equities worth more than Rs 21,800 crore in the first week of March.
While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors dampens investor sentiment. “Uncertainty surrounding the Middle East conflict, steady decline in the market, the vulnerability of the Indian economy to sharp crude spike and the sharp depreciation of the rupee contributed to the sustained FII selling in the cash market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
6) Global markets crash
Asian markets crashed, tracking the sharp increase in global crude oil prices. Japan’s Nikkei 225 crashed more than 5%, while South Korea’s Kospi plunged over 6%. Hong Kong’s Hang Seng fell nearly 1.5%, while China’s Shanghai Composite was down around 1%.
Wall Street had closed in the deep red on Friday, with US’ tech-heavy Nasdaq falling over 1.5%. UK’s FTSE and Germany’s DAX are currently down nearly 2%, while France’s CAC cracked more than 2%.
7) Middle East wars’ possible impact on India’s macroeconomics
In case the Middle East conflict continues to spike energy prices and disrupt supplies, India could face pressure on rupee, higher inflation and a widening current account deficit, Moody’s Ratings said. Costly energy imports would weaken the rupee, raise inflation, worsen the current account balance and complicate monetary policy as well as fiscal management if they lead to expanded subsidies to help offset the economic shock,” it added.
“But a prolonged disruption in navigation through the Strait of Hormuz, beyond our baseline of a few weeks, would likely trigger sustained supply shortages; prices averaging higher than USD 100 per barrel for Brent, the main international benchmark crude; higher inflation; tighter financial conditions; and slower global growth,” it further said. Rising inflation expectations will lead to concerns over RBI having lower margin to ease monetary policy.
What should investors do?
The rise in risk-off sentiment led to India VIX, a measure of volatility, spiking more than 17% to 23.36. Selling intensified as the Middle East conflict entered its second week with no signs of de-escalation, said Vinod Nair, Head of Research, Geojit Investments. He added that the sustained rise in crude prices is likely to complicate the RBI’s policy outlook by keeping inflation elevated and posing risks to growth. Additional concerns in the U.S. about potential caps on redemptions in specific funds also contributed to the sell-off.
“Despite this, the current phase may offer opportunities for long-term investors. Selective value buying in pharma and IT helped limit deeper losses and indicated a defensive stance amid a weakening rupee in the short term,” the analyst further said.
“The lesson from history is that the impact of geopolitical issues like conflicts on markets do not last long. Therefore, investors have to be patient,” said Vijayakumar from Geojit Investments.
“Domestic consumption segments like banking and financials, automobiles, telecom and cement will not be impacted much by the crisis. Defense and pharmaceuticals will be relatively resilient. Long-term investors with high risk appetite can nibble at stocks in these strong themes,” he added.
Nifty’s plunge to 23,535 is awaited, and that would complete a 61.8 retracement of the upmove since March 2025, said Anand James, Chief Market Strategist, Geojit Investments. “Breach of the same should see multi leg downsides initially aiming the March 2025 low near 22,000 and November 2023 low near 19,000. Near term upside prospects depend on the ability to float above 24,000,” he further said.