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Indian equity market saw a selloff on Monday as sentiments soured, with tensions in West Asia esclating after the US joined the conflict by striking three nuclear sites in Iran.
The BSE Sensex index plunged 931 points or 1.13 per cent in the intraday trade to hit a low of 81,476.7 during the day. The NSE Nifty50 fell 287 points, or 1.15 per cent, to 24,824.8. The indices registered their worst fall since June 13 this year.
All sectors on NSE except Nifty Media were trading in the red, with Nifty IT and Auto leading the decline. Bears were in control of the market as 2,097 stocks declined on the BSE, while 1,265 counters advanced. About 179 stocks remain unchanged.
The broader market, however, outperformed the frontline stocks as they only edged slightly lower. The Nifty Midcap 100 index was down 0.02 per cent, while the smallcap index was higher by 0.2 per cent, as of 11:00 AM.
The ongoing market selloff could prove to be a short-term blip if the Israel-Iran conflict remains contained, according to Ambareesh Baliga, an independent market analyst. "Historically, in most of these conflicts, there’s an initial knee-jerk reaction where markets fall because the outcome is uncertain." As long as oil supply isn’t disrupted, most markets, especially those not geographically involved, tend to recover, he added.
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"The fear now is potential closure of the Strait of Hormuz, which could disrupt oil and broader supply chains. If this doesn’t materialize and the conflict remains contained, markets should stabilize within a few days."
Key reasons behind the Sensex, Nifty fall today:
US joins the West Asia turmoil: Over the weekend, the US struck three nuclear sites in Iran with bunker-busting bombs, ending speculation of its involvement in the ongoing conflict in the region. US President Donald Trump declared the three facilities “totally obliterated,” and warned of greater attacks unless Iran makes peace with Israel.
Following the strikes, Iran vowed to retaliate, warning the US of "dire consequences" and has reportedly approved the closure of the Strait of Hormuz. Asked about the Strait, Iran’s Foreign Minister Seyed Abbas Aragchi said that “a variety of options" are available to Iran, adding that the country would defend itself by all means necessary.
Crude oil prices jump, Rupee weakens: Oil prices rose as much as 6 per cent before paring gains as the closure of the Strait of Hormuz threatens the global oil supply chain. Brent crude price was up 1.19 per cent at $77.93 per barrel.
The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest, it is 33 km wide, with only 3 km allocated to each shipping direction
In 2024, about 20 per cent of global petroleum liquids consumption flowed through the Strait of Hormuz, with India among the top destinations for crude oil moving through the route in Asia, according to data from the US Energy Information Administration. Therefore, any potential disruption of the oil trade and crude oil spike could hurt the current account deficit, hurting the currency.
The Rupee depreciated 18 paise to open at 86.77 against the dollar. The currency has fallen 1.34 per cent so far this month.
OMCs take a hit: As a result of a jump in crude oil prices, Indian oil marketing companies, especially the downstream companies, continued to trade under pressure. A jump in the oil prices will lead to higher costs for refiners, with their margins taking an impact.
Shares of Indian Oil Corporation and Bharat Petroleum Corp Ltd. fell as much as 1.62 per cent and 1.69 per cent, respectively, on Monday. Hindustan Petroleum Corporation Ltd. counter fell 1.8 per cent.
IT stocks plunge: Information technology was among the worst-hit sectors in trade today, even after Accenture's third quarter of fiscal 2025 beat the Street's expectations. The decline in the counters came as analysts noted that demand has not changed significantly for the Indian IT pack. "We believe that the current environment is not conducive for healthy deal wins for all players," Kotak Securities said in a note.
The Nifty IT index fell as much as 1.8 per cent, led by declines in Infosys, HCL Technologies and Tata Consultancy Services.
What should investors do?
Retail investors should keep 10–15 per cent of the portfolio in cash to use during such market dips, Baliga said. "It offers a buying opportunity during sharp corrections. If worst-case scenarios play out, you’ll need to reassess, but for now, staying partially invested is wise."
In terms of allocation, focusing on domestic-oriented sectors is preferable, Baliga added. India has done well with its strong domestic production and consumption base, which helps buffer against global shocks, he said.
