New Delhi: 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 the latest phase of the conflict involving the United States, Israel and Iran began on February 28.

India’s benchmark indices have declined steadily as investors react to rising crude oil prices, foreign fund outflows and fears of wider economic repercussions for India, the world’s third-largest importer of crude oil.

On Monday alone, about ₹12.78 trillion was erased from the market capitalisation of listed companies. During trading, the BSE Sensex dropped 2,299.65 points (2.91%) to 76,619.25, down from the previous close of 78,918.90. The NSE Nifty 50 fell 714.20 points (2.92%) to 23,736.25, compared with its previous close of 24,450.45.

The sharp decline marks one of the most significant bouts of volatility on Dalal Street in more than a year.

Data from the Bombay Stock Exchange indicates that the combined market capitalisation of all listed companies has shrunk sharply since the geopolitical escalation began.

Estimated decline in market capitalisation:
Date | BSE Total Market Cap | Change
Feb 28 | ₹463 lakh crore | —
March 6 | ₹444 lakh crore (close) | ₹19 lakh crore loss
March 9 | ₹432 lakh crore (intraday) | ₹12 lakh crore loss
Total erosion since Feb 28: ₹31 lakh crore
(The estimate is based on available BSE market capitalisation data and daily exchange disclosures.)

Oil Price Surge Driving Sell-Off

Market turbulence has coincided with a sharp spike in global crude oil prices. Brent crude surged more than 25% within a week, briefly crossing $114 per barrel, amid concerns that the conflict could disrupt shipping through the Strait of Hormuz, a crucial route for global oil supplies.

For India, which imports around 85% of its oil requirements, higher crude prices raise concerns about inflation, the current account deficit and pressure on government finances.

Foreign Investors Turn Sellers

Foreign portfolio investors have also stepped up selling as global markets turn risk-averse. Over the past four trading sessions, overseas investors have withdrawn roughly ₹21,000 crore from Indian equities, reversing part of the ₹22,615 crore inflows recorded in February — the highest monthly inflow in 17 months.

Banking and Industrial Stocks Lead Declines

The sell-off has been broad-based across sectors. Among the major laggards:
• HDFC Bank fell more than 3%
• ICICI Bank declined about 4.5%
• State Bank of India dropped over 5%
• Larsen & Toubro slid nearly 5%

Oil marketing companies — BPCL, HPCL and Indian Oil — fell more than 8%, as higher crude prices threaten their margins if retail fuel prices are not raised proportionately.

Airline stocks also came under pressure, with InterGlobe Aviation (IndiGo) dropping over 7% amid concerns that rising jet fuel costs could affect profitability.

Mid and Small-Cap Stocks Under Pressure

Broader markets have suffered even steeper declines. The BSE MidCap index fell nearly 3%, while the BSE SmallCap index dropped more than 3%, reflecting widespread caution among investors.

Defence Stocks Buck the Trend

Defence companies have emerged as one of the few bright spots. Shares in the sector have risen roughly 6% over the past week, as investors expect geopolitical tensions to drive increased defence spending.

Volatility Expected to Continue

Market analysts believe volatility may persist in the near term as investors closely track developments in the Middle East and movements in global oil prices.

Experts warn that if crude oil remains above $100 per barrel for an extended period, it could put pressure on India’s inflation, currency and fiscal stability. For now, sentiment on Dalal Street remains closely tied to the trajectory of the ongoing conflict in the Middle East.