Investors lost over Rs 9 lakh crore in market value on Monday as India’s equity market plunged amid a crude oil surge of up to 29% overnight, triggered by escalating West Asia tensions. The sell-off fueled inflation fears, particularly for oil-importing nations like India, with BSE-listed firms’ market cap dropping to Rs 441.10 lakh crore from Rs 449.35 lakh crore.
Brent crude spiked to $119/barrel amid the closure of the Strait of Hormuz which handles 20% of global oil and 40% of India’s crude imports. Limited storage in producer nations and attacks on oil/gas infrastructure and vessels also contributed to the spike. As of 9 pm on Monday, Brent crude was trading in the range of $98-99/barrel.
The benchmark index BSE Sensex crashed nearly 2,500 points on Monday morning to hit a low of 77,057 while the NSE Nifty50 fell more than 750 points to below 23,700. The market trimmed losses and at the close, the Sensex fell 1,352.74 points, or 171%, to 77,566.16, while the Nifty declined 422.40 points, or 1.73%, to settle at 24,028.05.
In the broader market, the Nifty Midcap and Small cap indices dropped about 2% each. Sectorally, all indices ended in the red, with Auto, Capital Goods, Metal, PSU Bank, Oil & Gas, and Private Bank sectors registering declines of 2–4$. 42 stocks in the Nifty50 pack were deep in the red with Tata Motors, Ultratech, Maruti Suzuki and Eicher Motors falling the most.
The domestic market downturn echoed global trends. Asian indices were deep in the red on Monday with Japanese and Korean indices falling 6%-7%. South Korea’s Kospi hit a lower circuit (for the second time in four trading sessions).
According to SBI Securities, higher energy prices (crude oil, natural gas, coal) are likely to translate into higher inflation in the coming months along with an impact on economic activities across major oil consumers such as India, Japan, China, Korea and Southeast Asia. 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.
Ankita Pathak, Head – Global Investments, Ionic Asset, said that the uptick in oil prices above USD 100/bbl could be detrimental for global markets in the near term.
“Persistence of oil around USD 100/bbl for the next 12 months could widen India’s CAD to 2.4%-2.6% and lift CPI inflation to 5.5%-5.7%, substantially higher than RBI’s H1 FY27 estimate of 4.1%. Also, INR could remain under pressure with the potential of further depreciation if the conflict persists,” added Pathak. The rupee traded sharply weaker, dropping Rs 0.52 to 92.50, as the dollar index strengthened above 99 and crude oil prices surged sharply.
Meanwhile, FIIs offloading shares (net sales) worth Rs 28,182 crores in the first five sessions of March is adding to rupee weakness and market turmoil.
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services, said that fluctuations in crude oil prices are expected to weigh on sectors where oil is a key input cost. He added that oil marketing companies, aviation, paints and cement stocks could face pressure due to rising and volatile crude prices.
Tensions in West Asia escalated after US and Israeli forces targeted key Iranian sites last 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, the two sides -- the US-Israel coalition and Iran -- continue to rain missiles and drones on each other. There are no signs of negotiations or diplomacy between the stakeholders to ease tensions in the region.
