Indian Stock Market Plunges to 4-Month Low Amid Escalating West Asia Conflict

Market Update: Global Geopolitical Tensions Weigh on Indian Indices

Key Figures:

• Nifty 50: down 2.3% at 23,878.15
• S&P BSE Sensex: down 2.3% at 77,111.92
• Brent Crude: $114.74 per barrel, highest level since 29 July 2022

Market Performance

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The Nifty 50 and S&P BSE Sensex tumbled almost 3% at the open on Monday as investors rushed to cut risk and reassess the global fallout from the war in West Asia. The Nifty 50 logged its biggest single-day fall since 7 April 2025. The war stoked fresh concerns about tighter oil supplies and the risk of prolonged disruptions to shipments passing through the Strait of Hormuz, one of the world’s most critical energy transit routes.

Regional Market Performance

• Japan’s Nikkei 225: slumped 7%
• Hong Kong’s Hang Seng: dropped 2.7%
• Taiwan Weighted: tanked 5%
• South Korea’s Kospi: over 8% down

Sectoral Performance

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• Nifty PSU Bank: fell 5%
• Nifty Auto: fell 5%
• Nifty Midcap 100: fell 3%
• Nifty Smallcap 250: fell 3%

Investor Sentiment

The India VIX, the volatility index, surged about 22%, signalling a sharp jump in investor anxiety. Foreign institutional investors (FIIs) turned sellers, offloading shares worth ₹6,418.90 crore so far this month. Domestic institutional investors, however, stepped in as steady buyers, cushioning the market with purchases worth ₹32,786.92 crore so far in March.

Earnings and Valuations

ICICI Securities estimates that the Nifty 50 could potentially drop by ~10% from its pre-conflict-day level of 25,178, and its P/E ratio could drop to ~18x, closer to the lowest levels in the post-Covid era. The brokerage also forecasts that the earnings yield could rise to about 5.6%, the highest in the post-Covid period, while the gap between bond yields and earnings yield could narrow to about 100 basis points, making equities relatively more attractive than bonds.