Indian equities extended their slide on March 2 as escalating tensions in West Asia triggered a surge in crude oil prices, weakened the rupee and intensified risk aversion across global markets.
The BSE Sensex fell 1,048 points, or 1.29 percent, to close at 80,238.85 — its lowest level in six months. The Nifty 50 declined 313 points, or 1.24 percent, to settle at 24,865.70, a one-month low.
Although the indices recovered partially after tumbling nearly 2 percent intraday ahead of the Holi holiday, investor wealth shrank by nearly ₹8 lakh-crore in a single session.
The sharp fall followed US–Israel air strikes on Iran that killed Supreme Leader Ayatollah Ali Khamenei, prompting retaliatory missile attacks from Tehran and raising fears of a wider regional conflict.
Brent crude futures surged more than 7 percent, briefly touching a 14-month high near $82.40 per barrel before easing to around $78.7 in late trade.
Key concerns driving the market:
Tehran’s announcement restricting navigation through the Strait of Hormuz
Nearly 20 percent of global oil flows pass through the strait
Over 40 percent of India’s crude imports transit this route
With India dependent on imports for nearly 90 percent of its crude needs, the spike in oil prices rattled sectors sensitive to input costs.
Stocks of oil marketing companies, paint and tyre manufacturers, aviation firms and chemical producers fell sharply. InterGlobe Aviation plunged over 6 percent, making it the worst performer on the Nifty. Larsen & Toubro declined nearly 5 percent, while Adani Ports and Asian Paints lost around 3 percent each.
Financials and autos also came under pressure. Bajaj Finserv, Jio Financial Services, Shriram Finance, Bajaj Finance and HDFC Life slipped 1–3 percent. SBI and Axis Bank ended about 1 percent lower. Mahindra & Mahindra, Eicher Motors, Bajaj Auto, Maruti Suzuki and Tata Motors fell 2–3 percent.
Fourteen of the 16 sectoral indices closed in the red, with midcaps and smallcaps losing 1.6 percent and 1.8 percent respectively.
The rupee depreciated against the dollar while government bond yields hardened amid global risk aversion. Asian currencies weakened and regional equities tracked losses worldwide.
Traders expect the Reserve Bank of India to step in if currency volatility intensifies. The central bank has historically looked through temporary geopolitically driven inflation spikes, focusing on core trends and growth durability while using liquidity measures to maintain stability.
India VIX, the volatility gauge, jumped over 25 percent to a nine-month high of 17.13, signalling heightened nervousness.
Foreign portfolio investors net sold ₹7,536 crore worth of equities on February 27, while domestic institutional investors bought ₹12,292 crore, according to provisional data.
VK Vijayakumar of Geojit Investments said energy risk remains the biggest threat to markets. A sharp 20 percent spike in crude is likely only if the Strait of Hormuz is fully closed, though there is no official confirmation yet. He cautioned against panic selling, noting that past crises such as Covid, the Russia–Ukraine war and the Gaza conflict had limited long-term market impact.
With crude prices, currency movements and geopolitical developments in focus, markets are likely to remain volatile in the near term.
