India’s equity markets ended sharply lower on Monday (March 30), the final trading session of the financial year 2026. Witnessing another session of carnage, the benchmark index BSE Sensex declined 1,635.67 points (2.22%) to 71,947.55, while the NSE Nifty 50 closed 488.20 points (2.14%) lower at 22,331.40.
The sharp sell-off in the past month, triggered by the ongoing conflict in West Asia, has pushed the benchmarks near their 52-week low levels and turned the annual return negative for the full financial year 2025-26. The Nifty50 dropped roughly 5% in the fiscal year while the BSE Sensex declined by 7% for the fiscal.
In the past one month, since when the escalation started, the indices declined 11-12% while from 52-week highs, the fall is in the range of 15-16%.
“Escalating tensions in West Asia continued to weigh heavily on markets, as the ongoing US–Israel conflict with Iran entered its fifth week and expanded across the region. Fresh attacks, including disruptions around key shipping routes near the Arabian Peninsula and the Red Sea, have intensified concerns over global energy supply, keeping investor risk appetite subdued,” said Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services.
Khemka added that the move in bond yields towards the 7% mark, the rupee weakening past 95 against the US dollar, and rising crude oil prices emerged as key drivers of the risk-off sentiment, reflecting tightening financial conditions and weighing on market performance.
Brent crude rose sharply at around $115 per barrel on Monday, up more than 60% in one month, as fears of prolonged supply disruptions from the ongoing West Asia conflict intensified.
Higher oil prices for an import-dependent nation such as India are likely to translate into higher inflation in the coming months, exerting pressure on currency stability and corporate margins, thereby impacting overall equity market sentiment.
On the macro front, the rupee weakened past the 95 mark against the US dollar, hitting a fresh record low despite RBI intervention, and has depreciated over 4% in March. At the same time, India’s 10-year bond yield crossed 7%, its highest level in over 21 months. The move signals a shift in policy expectations, with elevated crude prices raising the risk of a tighter RBI stance if inflationary pressures persist, stated Khemka.
The relentless selling by Foreign Institutional Investors (FII) have also contributed to the weakening of the rupee and equities. FIIs were net sellers on all trading days in March, so far, taking the total selling through exchanges in March through the 27th to a record Rs 118,093 crores, as per NSDL data.
Vinod Nair, Head of Research, Geojit Investments said that amid unresolved global tensions, rising oil prices and continued FII outflows, the market ended the final trading session of the current financial year on a cautious note. He added that continued volatility in oil prices and rupee weakness may exert pressure on input costs, increasing the risk of near-term earnings downgrades.
“Banking stocks were among the key laggards following the RBI’s new restrictions on banks’ foreign exchange positions aimed at stabilising the rupee, which led to sharp declines across major private and public sector lenders. While valuations now appear more favourable after the recent correction, the trajectory of earnings revisions remains the key determinant of market direction,” said Nair.
Commenting on FII selling, Pabitro Mukherjee, Associate Vice President – Technical Research, Bajaj Broking said that the unprecedented sell-off in Indian equities during March 2026 is one of the largest monthly capital outflows in recent history.
“The March 2026 FII sell-off represents a critical phase for Indian equity markets, characterised by external shocks and heightened global uncertainty. While domestic investors have provided some resilience, the sustained withdrawal of foreign capital, combined with adverse macroeconomic conditions, continues to weigh heavily on market performance,” added Mukherjee.