Indian equity benchmarks experienced a severe downturn on Monday, with BSE Sensex opening 821.73 points, or 1.11%, lower at 73,421.61 and Nifty 50 opening at 23,080.70, down by 286.00 points, or 1.22%. According to The Times of India, the decline erased more than ₹3 lakh crore from the combined market value of BSE-listed companies, reducing overall market capitalisation to nearly ₹459 lakh crore. The market crash was attributed to fresh tensions between the US and Iran that weighed on investor sentiment and led to crude oil prices rising. India VIX, which measures market volatility, jumped over 8% to 16.62 during trading hours, reflecting the heightened uncertainty among investors. GIFT Nifty was quoted at 23,179, down nearly 273 points, reflecting risk-off sentiment among investors following a broad sell-off in global equities.
The latest developments have cast uncertainty over the status of ceasefire and diplomatic efforts involving the United States and Iran, with Iran launching missile strikes against Israel, raising doubts over the prospects of a near-term resolution to the broader conflict in West Asia. As reported by The Times of India, the Israeli strikes were a direct retaliation for Iran's overnight ballistic missile attack on the Ramat David airbase in northern Israel. Powerful explosions were reported across multiple Iranian cities including Tehran, Tabriz and Isfahan, with the IRGC confirming the blasts. The escalation has significantly intensified regional tensions and contributed to the sharp decline in Indian equity markets, with markets increasingly concerned about the potential impact on global trade routes and energy supplies.
Equity markets across Asia opened deep in the red as investors reacted to the worsening geopolitical backdrop. South Korea's Kospi plunged around 9%, emerging as the biggest loser in the region, while Japan's Nikkei 225 fell more than 4% and Hong Kong's Hang Seng index declined around 1.5%. The widespread weakness follows a sharp correction in US equities at the end of last week, highlighting growing concerns over global growth and investor risk appetite. US markets witnessed a steep sell-off on Friday, led by heavy losses in technology stocks, with the Nasdaq Composite slumping 4.18%, marking its sharpest single-day decline in over a year, while the S&P 500 fell 2.64% and the Dow Jones Industrial Average lost 1.35%.
The market decline intensified with Nifty Midcap 100 index crashing 1.6% (nearly 950 points) while Nifty Smallcap 100 index lost 1.4% (around 254 points) as per The Economic Times. The broader market indices are currently underperforming the benchmark Nifty 50, which dropped around 1.3%. Top midcap losers included IndusInd Bank shares falling 3% after fresh whistleblower complaint reached PMO and RBI, while Tata Technologies, Creditacess Grameen, NBCC and Zensar Technologies shares fell around 4% each. CAMS, Triveni Turbine, PNB Housing Finance, Firstsource Solutions, Aarti Industries and Sagility shares dropped over 3% each. The weakness in the broader market was amplified by selling in information technology stocks, with the sector having delivered strong gains in recent sessions despite heightened volatility elsewhere.
Crude oil prices moved higher after the latest escalation in West Asia renewed concerns over supply disruptions, with Brent crude futures rising more than 3% to around $96 per barrel as traders assessed the possibility of prolonged geopolitical instability in the region. As reported by The Times of India, rising crude oil prices have continued to fuel concerns about India's import costs and inflation trajectory, prompting caution in the currency market. Higher crude prices remain a key concern for India, given their potential impact on inflation, the rupee and corporate margins. Despite the challenging external environment, analysts note that certain domestic factors may help limit downside pressure, including India's resilient GDP growth, recent support for the rupee following the RBI's monetary policy decision, and relatively stable domestic economic indicators.
