Investors have lost nearly Rs 19 lakh crore in the past five trading sessions with India’s equity benchmark indices – NSE Nifty and BSE Sensex – falling up to 4%. The market capitalisation (m-cap) of all BSE-listed firms has come down from Rs 468.28 lakh crore to Rs 449.35 lakh crore in the past one week. The Sensex has shed 3,329 points while the Nifty has shed 1,046 points during this period.
Domestic equities came under pressure last Friday amid rising tensions and have since plummeted following a full-blown escalation on Saturday, when US and Israeli forces targeted key Iranian sites in West Asia.
Investors’ sentiments took a hit as a crisis in the Gulf region is always expected to lift crude oil prices. The fears have intensified after shipping activity through the Strait of Hormuz, which carries 20% of global oil and 40% of India's crude imports, saw a near halt as the conflict continued, raising fresh fears of disruptions to global oil supplies.
This has already pushed Brent crude above the $85 per barrel range, while US crude surged 8.5% to $81, marking its largest single-day jump since 2020. Given that India is a key importer of oil, higher crude prices are a key macro headwind for the country. This may exert pressure on inflation, currency stability and corporate margins, thereby impacting overall equity market sentiment.
Arun Patel, founder and partner at Arunasset Investment Services, said that Brent crude has surged from about $67 a month ago to around $84–85 now, a roughly 25% jump in just thirty days, embedding a clear war premium.
Patel added that if tensions persist and the Strait remains contested, oil moving toward $100 cannot be ruled out. The oil shock is also pushing bond yields higher because it is inflationary. The US 10-year yield has risen to around 4.15%, while India’s 10-year G-Sec has climbed to about 6.69%, signalling higher-for-longer interest rates.
“For India, the impact is amplified as the country imports nearly 89% of its crude. Every $10 increase in oil widens India’s current account deficit by roughly 0.4% of GDP. With the rupee testing ₹92 per dollar, the risk of imported inflation is rising. If the conflict evolves into a longer proxy or shadow war lasting months, elevated oil prices and yields could keep equities volatile and vulnerable to further downside,” added Patel.
The Sensex fell 1.37% on Friday to 78,918.9, while the Nifty50 declined 1.27% to 24,450.45. Except for Thursday’s recovery, the benchmarks have declined more than 1% in four of the past five sessions, underscoring the market’s pronounced weakness since Middle East tensions escalated.
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services, said that going ahead, developments in West Asia and their implications for global energy supply will remain key monitorables for markets, alongside movements in crude prices and broader global risk sentiment.
Tension in West Asia escalated after US and Israeli forces targeted key Iranian sites over the weekend, resulting in the death of Supreme Leader Ayatollah Ali Khamenei. Iran swiftly responded with a barrage of ballistic missiles aimed at Israeli cities and important Middle East hubs such as Dubai, Kuwait and Bahrain. As of now, both sides -- the US-Israel coalition and Iran -- continue to rain missiles and drones on each other.
