India’s stock markets tumbled at the open on Monday as the widening war involving Iran in West Asia sent crude oil prices surging, raising fears of renewed inflationary pressure and strain on the rupee.
The 30-share BSE Sensex dropped as much as 3.16%, or 2,494.35 points, to 76,424.55, while the broader NSE Nifty 50 fell up to 2.8%, slipping below the 23,800 mark.
The selloff was driven largely by a sharp spike in energy markets, with Brent crude prices surging close to $120 a barrel.
Market breadth remained weak, with nearly all companies in the Nifty 500 trading in the red. The Nifty Midcap 100 and Nifty Smallcap 100 each fell about 1.8%, while the volatility gauge India VIX jumped more than 20% to its highest level since July 2024.
Investor wealth worth roughly ₹12 lakh crore was wiped out in early trade.
Shares of oil marketing companies such as Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited plunged up to 8% amid the surge in crude prices. Banking and heavyweight stocks including HDFC Bank, ICICI Bank and Reliance Industries were among the top losers on the Nifty 50.
“Big oil importers like India will be hit hard if the Iran war lingers and crude prices remain high,” said V.K. Vijayakumar, chief investment strategist at Geojit Investments Ltd.. “The market will price in the economic consequences of this oil shock. Inflation will certainly move up whether the oil price hike is passed on to consumers or not.”
The price shock comes as the escalating conflict raises concerns about prolonged supply disruptions through the Strait of Hormuz. Adding to the pressure on supply, Iraq and Kuwait have begun curbing oil output, compounding earlier liquefied natural gas reductions from Qatar.
Geopolitical tensions intensified over the weekend as Iran named Mojtaba Khamenei as the successor to his father, Ali Khamenei, signalling the continued dominance of hardliners in Tehran. Meanwhile, Israel expanded its military campaign with strikes targeting Iranian commanders in Beirut early Sunday, pushing the death toll from days of attacks close to 400.
For India — the world’s third-largest crude importer — the spike in energy costs poses a significant macroeconomic challenge. Higher oil prices could widen the government’s fiscal deficit, squeeze corporate margins through rising input costs and place fresh depreciation pressure on the rupee.
Economists warn that even if hostilities ease, damaged infrastructure, disrupted logistics and elevated shipping risks could keep global fuel prices high for months.
The geopolitical shock has already rattled Dalal Street. The Nifty 50 and S&P BSE Sensex fell about 2.9% last week, marking their worst weekly performance in more than a year.
Foreign institutional investors sold shares worth ₹6,030 crore ($654 million) on Friday, according to provisional exchange data, wiping out the ₹6,972 crore worth of purchases made by domestic funds.
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