Middle East Conflict Wipes Out ₹31 Lakh Crore From Indian Stock Market
Mumbai, March 9, KNT: Escalating hostilities in the Middle East have triggered a sharp sell-off in Indian equities, wiping out nearly ₹31 lakh crore in investor wealth since fresh conflict involving the United States, Israel and Iran intensified on February 28.
The sell-off reflects growing concerns among investors over surging crude oil prices, foreign fund outflows and fears of broader economic fallout for India, which imports nearly 85 percent of its crude oil requirements.
On Monday alone, around ₹12.78 lakh crore was erased from the market capitalisation of companies listed on the Bombay Stock Exchange (BSE) as benchmark indices recorded steep declines.
The BSE Sensex was trading at 76,619.25, down by 2,299.65 points or 2.91 percent from the previous session’s close of 78,918.90. The NSE Nifty 50 also fell sharply, dropping 714.20 points or 2.92 percent to 23,736.25 from its earlier close of 24,450.45.
Market data shows that the combined market capitalisation of all listed companies on the BSE fell from about ₹463 lakh crore on February 28 to around ₹432 lakh crore during intraday trade on March 9.
The decline represents a cumulative erosion of approximately ₹31 lakh crore in investor wealth during the period.
Analysts said the market turbulence has been largely driven by the spike in global oil prices following the conflict in the Middle East.
Brent crude oil surged more than 25 percent within a week and briefly crossed $114 per barrel amid fears that the conflict could disrupt shipments through the Strait of Hormuz, a key route for global oil supplies.
Higher crude prices are particularly concerning for India because of the country’s heavy dependence on oil imports, raising fears about inflation, fiscal pressures and the widening current account deficit.
Foreign portfolio investors have also stepped up selling in recent sessions amid global uncertainty.
Over the last four trading sessions, overseas investors have pulled out nearly ₹21,000 crore from Indian equities, reversing part of the ₹22,615 crore inflows recorded in February, which had been the highest in 17 months.
The selling pressure has been broad-based across sectors with major banking and infrastructure stocks witnessing sharp declines.
Among the major losers, shares of HDFC Bank fell more than three percent, while ICICI Bank dropped around 4.5 percent. State Bank of India slipped over five percent and Larsen & Toubro declined nearly five percent.
Oil marketing companies such as BPCL, HPCL and Indian Oil also fell more than eight percent as rising crude prices threaten their margins if retail fuel prices are not increased in line with input costs.
Airline stocks were also under pressure, with InterGlobe Aviation falling more than seven percent amid concerns that higher jet fuel prices could affect profitability.
Broader markets have witnessed even steeper losses, with the BSE MidCap index falling nearly three percent and the BSE SmallCap index declining by more than three percent.
Defence stocks, however, emerged as one of the few gainers during the week, rising about six percent as investors anticipated higher defence spending amid escalating geopolitical tensions.
Market participants said volatility is likely to persist in the coming days as investors continue to monitor developments in the Middle East conflict and movements in global oil prices.
Analysts warned that if crude oil prices remain above $100 per barrel for an extended period, it could put pressure on inflation, the rupee and India’s broader macroeconomic stability. [KNT]
