Rs 6.35 lakh crore wiped out as oil spike and war fears grip markets

Synopsis

Indian markets plunged and the rupee weakened as conflict between the US and Iran escalated, causing oil prices to surge nearly 8%. Investors are cutting back on risk amid concerns over supply disruptions in West Asia and the safety of Indian citizens. The situation raises fears of a prolonged conflict, potentially pushing oil prices to $100 a barrel.

Mumbai: Indian stocks and the rupee slumped while precious metals soared Monday, with investors cutting back on risk in the face of the full-blown conflict between US-Israel and Iran. The sell-off eroded BSE-listed companies' market value by Rs 6.35 lakh crore.

Oil jumped nearly 8% as concerns over supply disruptions in West Asia - the world's top energy hub - drove up prices, underscoring India's vulnerability as a net importer.

NSE's Nifty fell 312.95 points, or 1.2%, to close at 24,865.70. BSE's Sensex declined 1048.34 points or 1.3% to end at 80,238.85.

"The markets are reacting to the unprecedented geopolitical events in the Gulf," said Nilesh Shah, MD, Kotak Asset Management.

"The Street is concerned about price as well as availability of oil and safety of our nine million plus citizens in West Asia and the flow of remittance," said Shah.

Agencies

Import Bill may Rise

Brent crude stood near $79 a barrel on Monday after opening above $81 earlier in the day, with the clash shutting the Strait of Hormuz - a key transit route off Iran's coast used to transport oil and gas.

One of Saudi Arabia's Aramco refineries temporarily halted operations on Monday following an attack by an Iranian drone. If the war continues for longer, oil forecasters are not ruling out Brent at $100.

"Rising West Asia tail risks raise the probability of a $100/bbl oil scenario, arguing for caution on risk assets and patience before buying any near-term dips," said Barclays in a client note on Monday.

According to media reports, US President Donald Trump expects the conflict to last for about four weeks. The probability of a prolonged conflict comes in the wake of existing concerns over the fallout of AI-related disruptions and unpredictability in the US tariff policy on risk asset valuations in the emerging markets.

Higher crude prices increase India's import bills, putting pressure on rupee. They simultaneously increase risk of imported inflation, potentially narrowing the policy space for India's rate-setting panel.

Foreign portfolio investors net sold shares worth ₹3,295.64 crore on March's first trading day after turning buyers worth ₹19,782 crore in February.

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