Indian stock markets have been bleeding – and multiple triggers in the last few quarters have left BSE Sensex and Nifty50 well below their record highs. The fresh negative for the stock markets is the US-Israel-Iran war that has sent ripples across global markets. Oil prices have risen to near the $80 mark and experts see them hitting $100 if the Middle East crisis does not calm down in the coming days.On Wednesday, BSE Sensex closed at 79,116.19, down over 1,100 points or 1.40%. Nifty50 ended at 24,480.50, down over 380 points or 1.55%. Both indices are down over 2.5% since the start of the conflict between US-Israel and Iran over the weekend.The drop has cost investors Rs 16.32 lakh crore in a span of two trading sessions. The stock market was closed on March 3, 2026 for Holi. The market capitalisation of BSE-listed companies has dropped from Rs 4,46,87,694.68 crore to Rs 4,47,18,243.15 crore since Friday last week. That’s a drop of Rs 16,32,428.12 crore in market cap.Middle East countries, including Iran which is at the centre of the conflict, are major suppliers of crude oil to the global economy. The Strait of Hormuz in Persian Gulf, a narrow but key passageway for the transit of oil and merchandise shipments has been closed, disrupting supplies to Asia. China and India in particular get a big chunk of their crude oil through this strait.
The fallout for energy markets is severe. The Strait of Hormuz accounts for roughly 30% of global seaborne crude oil, nearly 20% of jet fuel, and about 16% of gasoline and naphtha flows. The conflict has shut the strait via insurance withdrawals, putting close to 20% of global oil supply at risk, alongside critical volumes of jet fuel, LPG, and LNG.
Middle East Crisis Bleeds Global Markets
India is not the only market to have seen losses in the wake of the Middle East situation. Major stock markets around the world have tanked as uncertainty mounts.
- Sensex has declined by about 2.7% from its February 27, 2026 closing. Similarly, Nifty50 index has dropped by about 2.8%
- US stock market index – S&P 500 – has fallen by less than 1%
- South Korea’s KOSPI has fallen by about 18.4% from the closing on February 27 to the closing on March 4, 2026. The fall is particularly drastic given its outperformance in the recent past.
- Japan’s Nikkei 225 has dropped by about 7.8%
- China’s Shanghai Composite Index has declined by approximately 1.9%
So, the question in investors minds is: what’s the road ahead? What is the best strategy in the current scenario and which sectors should they focus on?
What should investors do?
In times of uncertainty, investors look for cues on which pockets to invest in and what strategy to adopt. Market experts that TOI spoke to said that instead of panic selling, investors should adopt a wait-and-watch strategy.According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, it is important to understand that stock markets are in unchartered territory in the near-term. “The major concern is the spike in crude oil and its impact. For India, which is dependent on imports for around 85% of her crude requirements, a sharp spike in crude oil prices will have negative implications for inflation, currency and economic growth. If the conflict gets resolved in two or three weeks the problem can be managed,” he says. “If, unfortunately, the conflict lingers longer the problem can aggravate leading to large trade deficits and high inflation. The market is concerned about that. Investors should wait and watch how the situation evolves. Panic selling is not advisable now. There is safety in domestic consumption themes like banking and defence,” he tells TOI.Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers Limited explains the possible negative impact of the Middle East crisis on India’s macro indicators, while expressing confidence in the growth story. She is of the view that the near-term conditions are likely to remain highly volatile. The VIX has spiked, signalling heightened risk aversion, and key technical support levels have been decisively breached. Gold futures have surged on MCX as investors rushed toward safe havens. “Elevated crude prices are a fiscal challenge, though the RBI retains room to manoeuvre and domestic consumption remains resilient. IT stocks face added pressure amid AI-led disruptions – particularly from Anthropic – unsettling US tech sentiment, while banking stocks warrant close monitoring for yield-curve dynamics,” she tells TOI.
Tanvi Kanchan draws on historical data for perspective. “History suggests that sharp geopolitical shocks, however painful, have not derailed India’s long-term market trajectory. The underlying domestic macro backdrop remains supportive, with robust GST collections of ₹1.71 lakh crore in January 2026, an earnings recovery expected in FY27, and strong performance from PSU banks and metals,” she explains.“This is not a moment for panic selling, but for discipline. Investors should review portfolios, avoid leverage, and use any de-escalation-led rebounds to rebalance toward quality large caps. SIP investors are best served by staying the course—this is precisely the kind of volatility through which long-term wealth is built,” she advises.Thomas V Abraham, Research Analyst at Mirae Asset Sharekhan lists the risks to the Indian economy: India faces rupee depreciation, widening CAD, and elevated inflation amid the Iran-Israel-US conflict, with crude oil prices as the dominant driver. Importing 80-90% of its crude needs, India remains highly sensitive to price volatility, he says.“Markets remain in wait-and-watch mode (VIX ~17), monitoring de-escalation prospects versus escalation risks. Prolonged uncertainty risks structural inflation, lack of rate cuts (in the current scenario), and subdued growth,” the market analyst says.With the strait of Hormuz shut, and no end in sight for the geo political tension, India will need to look at all alternatives to import crude with Rupee at all time low against the dollar and crude prices increasing significantly, the expert tells TOI. He lists sectors and stocks that are likely to be impacted in the short-term and long-term.Short-Term Sector Impacts (Brief Uncertainties)• Negatives: OMCs, aviation (IndiGo), and paints face margin compression from higher crude costs. Some companies to be impacted include Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL).• Positives: Upstream oil firms benefit as elevated prices per barrel offset inflation. Some companies to benefit include Oil and Natural Gas Corporation (ONGC), Oil India Ltd (OIL)Longer-Term Sector Impacts (Prolonged Uncertainties)• Negatives: Autos and discretionary FMCG suffer from reduced demand due to higher fuel and financing costs.• Positives: Defence/aerospace gains from elevated border security needs; One could also tap into the defensive plays to ride out this period, he says.“Pharma sector offers capital preservation plus rupee depreciation tailwinds; gold/gold etfs hedges geopolitical volatility. Our top picks for the sector are Sun Pharma, Dr Reddys, and Lupin,” Thomas V Abraham adds.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
