Global Markets Experience Volatility Amid Uncertainty in Iran

Market Volatility: Geopolitical Risks Push Global Markets Down

Losses: The ongoing war in West Asia has led to a significant loss of ₹6.5 trillion in market value from BSE-listed companies. The India VIX jumped by 23.5%, its largest single-day increase in nearly 11 months, reflecting growing investor anxiety.

Global Market Reactions: The crisis led to a broad-based flight from risk, with global equity markets retreating. The DAX fell by 1.9%, while the CAC 40 dropped by 1.6%. In Asia, the Hang Seng Index declined by 2.1%. The Nifty 50 and S&P BSE Sensex both shed 1.3% to close at 24,865.70 and 80,238.85, respectively.

Segmental Performance: The pain was worse in mid- and small-cap segments, with the Nifty Smallcap 250 tumbling by 1.9%. Provisional data showed that Foreign Institutional Investors (FIIs) net sold Indian equities worth ₹3,296 crore, while Domestic Institutional Investors (DIIs) net bought shares worth ₹8,594 crore.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Impact on India: The developments in West Asia impact India in two main ways: by pushing up the cost of oil & gas and shipping, and by making global investors temporarily pull back into 'safer' assets.

Oil Price Hike: Oil prices have climbed by 6% since Friday's close. India imports over 80% of its crude needs, leaving it highly exposed to the instability.

Crude Risks: A closure of the Strait of Hormuz represents a key risk to crude oil, refined products, and LNG prices. Nearly 50% or more of India's energy imports pass through the Strait, affecting the country's energy security, inflation trajectory, and external balances.

Market Outlook: Despite the current volatility, market experts believe that the trend could continue for a few more months. Gaurav Dua, chief investment officer at Standard Chartered Securities (India) Ltd, feels that the Nifty has given median returns of 17% over the 12 months and could see better times in H2 of calendar year 2026.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Return of Foreign Investors: Some market experts believe that foreign investors could soon return to India. Swati Khemani, founder and CEO of Carnelian Asset Management and Advisors, believes that the return of global certainty could channel foreign capital toward India, as investors seek to diversify into stable markets with no glaring risks and strong underlying fundamentals.