Indian markets crash as West Asia war fears trigger ₹8 lakh crore investor loss, crude oil soars 7%

Rising geopolitical tensions, surging crude prices, weak rupee, and heavy FII selling push Sensex and Nifty down over 1%, shaking investor confidence

Indian stock markets witnessed a sharp sell-off on Monday, with benchmark indices Sensex and Nifty plunging over 1%, as escalating war tensions in West Asia triggered panic among investors. The fall came after reports that Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in missile strikes carried out by the US and Israel, significantly worsening the conflict in the region.

By 10:09 am, the Sensex dropped 1,001.35 points (1.23%) to 80,285.84, while the Nifty fell 301.50 points (1.2%) to 24,877.15. Market breadth remained extremely weak, with only 710 stocks advancing, 2,903 stocks declining, and 148 stocks trading flat.

Within the first 90 minutes of trading, investors lost nearly ₹8 lakh crore in market value, as heavy selling pressure dominated Dalal Street. Fears of prolonged global conflict and economic uncertainty led investors to rush for the exit, dragging down major stocks across sectors.

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Except for metal stocks, all major sectoral indices traded in the red. Mid-cap and small-cap stocks declined by 0.8% each, reflecting broad-based selling. Shares of oil marketing companies, paint makers, tyre manufacturers, airlines, and chemical companies were among the worst hit, mainly due to a sharp spike in crude oil prices.

On Monday, crude oil prices surged over 7%, reaching the highest levels in months. Brent crude climbed to nearly $82.40 per barrel, marking a 14-month high. The rally was driven by concerns over oil supply disruption after Tehran announced the closure of the Strait of Hormuz, a key global shipping route through which around 20% of the world’s oil and over 40% of India’s crude imports pass.

Experts warned that continued closure could push crude prices up by nearly 20%, posing major risks to global markets and inflation. Analysts also cautioned that rising oil prices could delay interest rate cuts by the Reserve Bank of India (RBI) and complicate inflation control measures.

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Adding to market pressure, the Indian rupee weakened against the US dollar, while government bond yields rose. Traders expect the RBI to intervene to prevent sharp currency depreciation, which could otherwise push the rupee back towards its record low of 91.9875.

Foreign investors intensified selling, with Foreign Institutional Investors (FIIs) offloading ₹7,536.4 crore worth of Indian equities on February 27, while Domestic Institutional Investors (DIIs) bought shares worth ₹12,292.8 crore.