Escalating crisis in West Asia driven by the Israel-Iran war routed share markets on Monday. In the initial trade, Sensex and Nifty tumbled 2,500 and 750 points respectively.
However, they recovered a bit by the close of the session. At closing, Sensex was down nearly 1,353 points at 77,566, while Nifty 50 tumbled over 422 points to settle at 24,028. The sell-off triggered a wipeout of Rs 8.5 lakh crore from the total market capitalisation. This included the erosion of investors' wealth in companies listed on BSE, bringing it down to Rs 441 lakh crore.
Deep dive in the initial trade
Shortly after opening, Sensex crashed nearly 2,500 points to hit the day's low at 76,424.55. Meanwhile, Nifty 50 tumbled over 750 points to 23,698. The spreading Iran war has sent panic across global markets, with no sign of relief in the near future.
Historic breakdown due to rising oil
The continuous increase in crude oil prices is crashing global markets. Data shows that over the past three months, Brent crude has climbed nearly 91%, marking the largest three-month rally in about 36 years. This is leading to a historic breakdown in Indian indices. The conflict has pushed crude oil prices above the USD 100 per barrel mark and driven the Indian rupee to a record low against the US dollar. This is amplifying concerns around inflation and economic slowdown.
Sell-off by foreign investors
The crash in the market was also driven by foreign portfolio investors stepping up selling amid the global risk-off mood. Over the last four trading sessions, overseas investors have withdrawn about Rs 21,000 crore from Indian equities, reversing part of the Rs 22,615 crore inflows recorded in February, which was the highest in 17 months.
Stocks that suffered
Amid inflation concerns, banking stocks remained the top losers in Monday's session. During the trade, HDFC Bank fell more than 3%, while ICICI Bank dropped about 4.5%, SBI witnessed a drop of 4.5%, and L&T lost over 5%. Oil marketing companies BPCL, HPCL, and Indian Oil fell more than 8%, as higher crude prices threaten their marketing margins if fuel prices are not raised in line with input costs. Airline stocks also suffered on Monday, with InterGlobe Aviation falling more than 7% amid fears that higher jet fuel prices could hurt profitability.