Indian equity market faced the brunt of the ongoing conflict in West Asia with the benchmark BSE Sensex crashing more than 2, 700 points at opening while NSE Nifty50 fell nearly 520 points. The gap-down opening was expected due to a full-blown crisis in the Middle East after US and Israeli forces targeted key Iranian sites over the weekend.
At the open, the Sensex tumbled as much as 3.4% or 2,743.46 points to hit a low of 78,543.73, while the NSE Nifty dropped 519.4 points, or 2.06% to 24,659.25. The Indian market also trimmed losses and at 10.30 am, Sensex was down about 1,000 points and Nifty was down 300 points.
The conflict also had a severe impact on the rupee which opened at 91.26 against the US dollar on Monday. It settled at 90.98 a dollar on Friday. It settled at 90.98 a dollar on Friday.
The fall in the Indian market mirrored the global trend as Japan's Nikkei 225 and South Korea's Kospi fell as much as 2-3% in early trade before trimming some losses. Hong Kong and the Chinese market also opened in the red.
The attacks from both sides have intensified geopolitical risks in West Asia and triggered immediate repercussions for global energy markets. The attacks have heightened fears of a Strait of Hormuz closure, a vital chokepoint through which nearly 20% of global crude oil flows daily.
In early traded, Brent crude futures jumped 13% to trade above $82 a barrel, its highest level since January 2025. The prices pared some gains as session progressed. For India, this spells trouble: soaring crude prices heighten inflation risks, driving up bond yields. Higher yields compress equity multiples, prompting investors to flee stocks. India imports 85-90% of its energy needs, with about 60% sourced from the Gulf region.
“If Iran chooses to mine the strait or use its stockpile of short-range missiles against tanker traffic, oil prices could spike above $100 per barrel. A prolonged closure of the strait, analysts warn, could tip the global turmoil further,” said Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers Limited.
Kanchan added, “Strong macroeconomic fundamentals provide long-term confidence and reinforce the case for India as a structural investment destination. However, the Iran conflict will cause short-term volatility. The market had already priced in much of the expectation of strong Q3 GDP data, and with a geopolitical shock of this magnitude hitting simultaneously, sentiment is likely to be driven by fear and oil prices.”
VK Vijayakumar, Chief Investment Strategist, Geojit Investments said that the uncertainty related to the war in West Asia will loom large over the market in the near-term.
“The major risk from the market perspective is the energy risk arising from the surge in crude. Indications are that a sharp spike in crude by, say 20%, is likely only if the Hormuz Strait is closed, obstructing oil transport through the strait. There is no official confirmation of this yet. If Brent crude remains around $ 76, equity markets may remain weak but are unlikely to witness a big crash,” added Vijayakumar.