Equity Benchmark Sensex witnessed a massive slide of over 1000 points, plunging below 81,000 while the Nifty 50 tanked 300 points in early trade on Monday amid escalations between Iran, Israel and the United States.
Iran on Sunday targeted oil ships, US naval assets, and locations in the Gulf and near the Strait of Hormuz, triggering global uncertainty and prompting fears of disruption to the critical shipping route, which handles around 20 per cent of global oil supply.
Crude oil prices surged past $80 per barrel on Monday, with further increases possible in the coming days, adding pressure on oil-dependent economies such as China and India.
Experts say that the ongoing tensions and the possibility of the conflict spilling over in the Middle East have triggered an energy crisis, with higher crude prices and tighter supply dominating the market.
They noted that a much sharper spike in crude is likely only if the Hormuz route is fully shut down.
However, while recent attacks on oil and cargo ships have not closed the strait fully, there is a high risk that Iran could do so if the war continues. If Brent remains around $76–80, equity markets may remain under pressure, but a deep crash looks unlikely at present.
India depends heavily on imported crude from the Gulf, so any sustained rise in prices can put extra strain on the Indian economy, especially with a weakened rupee. Several Asian currencies have already softened, and safe-haven demand has increased across global markets.
Analysts, on the other hand, believe that panic selling during geopolitical tensions is a poor decision, fuelled by anxiety, which might put investors seeking profits in a spot of bother later on.
Previous events like the Covid crash, the Russia-Ukraine conflict, and earlier Middle East tensions show that markets often recover within months once immediate fears subside.
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