India’s equity market nosedived on Wednesday with the benchmark indices BSE Sensex and NSE Nifty50 crashing more than 2% each. The selling in global equities, including India, has picked up pace amid increased chances of a prolonged full-blown war in West Asia, as the US-Israel coalition and Iran continue to exchange missiles, and its impact on oil prices which have risen sharply in recent sessions.
The Sensex crashed up to 1,800 points, or 2.2%, in the early hours of Wednesday, to an intraday low of 78,443.20, while the Nifty 50 plunged over 550 points, or 2.3%, to the day's low of 24,305.40. At close on Wednesday, the Sensex was down 1,122.66 points (1.40%) to 79,116.19, while the Nifty declined 385.20 points (1.55%) to 24,480.50. The benchmarks have fallen about 4% each in the past three seasons.
This market downturn echoed global trends, with Japan’s Nikkei 225 and South Korea’s Kospi suffering the steepest declines. Meanwhile, the rupee tumbled to a new low of 92.30 against the US dollar, weighed down by surging crude and persistent geopolitical risks
The fresh selling arises amid the closure of the Strait of Hormuz which carries about 20% of the world's crude. Disruptions in Gulf oil tanker movements and refinery attacks have triggered a sharp surge in energy prices, posing major headwinds for India and the global economy.
Since the West Asia crisis that began on Saturday, crude prices have shot up more than 15% and the global benchmark Brent is quoting $82.60% a barrel on Wednesday while the Iranian attack on the Qatari LNG facility has led to gas prices surging 55% in Europe.
The important trade route has come to a standstill as Iran continues to rain missiles and drones across West Asia. The action by Iran comes after US and Israeli forces targeted key Iranian sites over the weekend, resulting in the death of Supreme Leader Ayatollah Ali Khamenei.
Vinod Nair, Head of Research, Geojit Investments, said that global risk sentiment remained fragile amid ongoing tensions in the Middle East and the closure of the Strait of Hormuz, which kept oil prices volatile. Indian equities mirrored the broader risk‑off environment due to the impact of inflation and the potential for higher CAD.
“The continued depreciation of the INR also remains a key concern, while incremental foreign outflows lead to near-term volatility in the market,” he added. Market experts have earlier warned that there would be more pain for the Indian market if tensions in West Asia persist for weeks as this could push crude oil prices to the $90-$100 per barrel mark.