The escalating Iran war led to the steepest decline in India’s stock market in six years. more than that has been wiped out ₹Since the beginning of the struggle, investors’ wealth has increased by Rs 25 lakh crore.
The 30-share S&P BSE Sensex fell 3.16% or 2,494.35 points to 76,424.55, while the broader NSE Nifty 50 fell as much as 3.07% to an intraday low of 23,697.80. Recovery was a bit slow till afternoon. The turmoil has been fueled by crude oil prices, which have risen significantly to reach levels above $120/barrel.
Every $10 rise in oil adds about 40 basis points to India’s current account deficit. The markets are determining its price very fast.
One basis point is one hundredth of one percentage point.
rapid, and serious damage
The abbreviated trading week to March 6 – India’s stock market was closed on Tuesday, March 3 for Holi – did little to stem the decline in India’s equity benchmarks.
- When the Nifty 50 opened on Monday, March 2 – the first session since the war began – it closed at 24,865, down 685 points or 2.68%.
- Wednesday (March 4) brought a second wave of selling, pushing the index 560 points higher at 24,305 – its lowest close since mid-2024 and the sharpest two-session decline since the pandemic crash of March 2020.
- A brief dead-cat bounce on Thursday (March 5, 2026) saw it rise 461 points to 24,766, only for sellers to return on Friday, taking the index back to 24,450.
The net weekly loss from the pre-war close of 25,550 was only 1,100 points or 4.31% in four trading sessions.
flight of foreign capital
Foreign institutional investors continued to sell and largely pulled ₹₹21,000 crore ($2.3 billion) from Indian equities between March 2 and 6. Combined market capitalization of all BSE listed companies fell ₹Below Rs 463.9 lakh crore ₹₹440 lakh crore—destruction of wealth equivalent to about one-seventh of India’s annual GDP. This figure has been crossed after the selling on Monday ₹25 lakh crores.
Sectoral damage was widespread but concentrated in financial and consumer discretionary names.
- India’s flagship carrier IndiGo, operated by InterGlobe Aviation Ltd, has lost more than 7% due to rising jet fuel costs.
- Banks as a group declined sharply, influenced by expectations of a repo rate delay by the Reserve Bank of India.
- Only a handful of index constituents have held their ground – among them Coal India and Reliance Industries – as investors turned to commodity-linked names that benefit from increased energy prices.
Are you experiencing more pain?
Analysts warn that the pain could deepen. Oil at $120 a barrel would widen India’s fiscal deficit by 30-40 basis points from budget, potentially forcing the government to cut capital spending or subsidize fuel – either outcome is negative for growth. RBI is now facing the dilemma of stagflation.
Domestic institutional investors have provided some relief, absorbing a portion of FII outflows and preventing more disorderly selling. Still, with Brent crude showing no signs of retreating, equity strategists are reducing year-end Nifty targets, with some expecting a low of 22,500 in a prolonged war scenario.
