India’s stock market extended their steepest slide in six years due to an escalating Iran war. That’s wiped out more than ₹25 lakh crore in investor wealth since the strife began.
The 30-share S&P BSE Sensex fell as much as 3.16%—or 2,494.35 points—to 76,424.55 points, while the wider NSE Nifty 50 shed up to 3.07% to an intraday low of 23,697.80 points. The recovery was patchy at best by midday. The turmoil is fuelled by crude oil prices, which have surged enough to test $120/barrel levels.
Every $10 rise in oil adds roughly 40 basis points to India’s current account deficit. Markets are pricing that in very fast.
One basis point is one-hundredth of a percentage point.
Swift, and severe damage
A truncated trading week through 6 March—India’s stock market was closed on account of Holi on Tuesday, 3 March—did precious little to arrest the slide in India’s equity benchmarks.
- When the Nifty 50 opened on Monday, March 2—the first session after the war began—it gapped down 685 points, or 2.68%, to close at 24,865.
- Wednesday (4 March) brought a second wave of selling, dragging the index a further 560 points to 24,305—its lowest close since mid-2024 and the sharpest two-session retreat since the pandemic crash of March 2020.
- A brief dead-cat bounce on Thursday (5 March 2026) recovered 461 points to 24,766, only for sellers to return on Friday, clipping the index back to 24,450.
The net weekly loss from the pre-war close of 25,550 stood at 1,100 points, or 4.31%, across just four trading sessions.
Flight of foreign capital
Foreign institutional investors were relentless sellers throughout, pulling roughly ₹21,000 crore ($2.3 billion) from Indian equities between 2 and 6 March. The combined market capitalisation of all BSE-listed companies fell from ₹463.9 lakh crore to below ₹440 lakh crore—wealth destruction equivalent to nearly one-seventh of India’s annual GDP. With Monday’s continued selloff, that figure has since crossed ₹25 lakh crore.
Sectoral damage has been broadly spread but concentrated in financials and consumer discretionary names.
- IndiGo, India’s dominant carrier operated by Interglobe Aviation Ltd., has lost more than 7% as jet fuel costs surge.
- Banks, battered by expectations of delayed repo rate cuts by the Reserve Bank of India, have fallen sharply as a group.
- Only a handful of index constituents have sort-of held their ground—Coal India and Reliance Industries among them—as investors rotate toward commodity-linked names that benefit from elevated energy prices.
More pain incoming?
Analysts warn the pain could deepen. Oil at $120 per barrel would push India’s fiscal deficit 30–40 basis points wider than budgeted, potentially forcing the government to trim capital expenditure or subsidise fuel—either outcome is negative for growth. The RBI now faces a stagflationary dilemma.
Domestic institutional investors have provided some cushion, absorbing a portion of the FII outflows and preventing a more disorderly selloff. Still, with Brent crude showing no signs of retreating, equity strategists are trimming year-end Nifty targets, with some now pencilling in levels as low as 22,500 in a prolonged-war scenario.
