Dalal Street witnessed a brutal sell-off on Wednesday morning, March 4, as escalating tensions in the ongoing US-Iran war rattled investor sentiment and triggered a sharp exodus from risk assets. The benchmark indices nosedived in early trade. Sensex has hit its lowest level since April 17 last year. Similarly has hit seven-month low.
Sensex, Nifty Plunge
The BSE Sensex slumped more than 1,750 points, or 2.2%, to hit an intraday low of 78,480.63 at the time of writing this story. The Nifty 50 fared no better, plunging over 500 points, or 2.1%, to touch 24,334.85 during the session.
The sharp fall wiped out investor wealth within minutes. Around 9:20 am, the overall market capitalisation of BSE-listed companies stood at ₹448 lakh crore, down from ₹457 lakh crore in the previous session, translating into an erosion of nearly ₹9 lakh crore.
What is Driving The Stock Market Fall?
The sell-off comes against the backdrop of an intensifying US-Israeli military campaign against Iran. President Donald Trump has stated that the conflict has no fixed timeline.
The geopolitical flare-up has disrupted oil shipments and sent crude prices soaring. Brent Crude climbed above $82 per barrel, while WTI Crude surged past $75 per barrel.
The spike in oil prices has stoked fresh concerns over inflation and dealt a blow to expectations of near-term rate cuts by both the US Federal Reserve and the Reserve Bank of India.
Amid the turmoil, the Indian rupee weakened sharply, slumping 66 paise to hit an all-time low of 92.15 against the US dollar in early Wednesday trade.
With nearly 85% of its oil requirements met through imports, India remains highly exposed to sustained crude price shocks.
Market participants fear that prolonged conflict could widen the trade deficit, depreciate the currency further, fuel imported inflation, and slow economic growth. If these concerns materialise, corporate earnings could take a significant hit.
Could Sensex Fall Below 75,000?
The weakness follows a sharp decline earlier this week. On Monday, March 2, Indian equities ended significantly lower, with the Nifty 50 slipping below the 24,900 mark.
The Sensex had fallen 1,048.34 points, or 1.29%, to close at 80,238.85. The Nifty 50 settled 312.95 points, or 1.24%, lower at 24,865.70.
Markets remained shut on Tuesday, March 3, on account of Holi 2026.
According to market experts, the benchmark Sensex could drop below 75,000 if West Asia tensions persist for weeks and crude oil climbs towards $90 per barrel.
Analysts say that the Indian market is heading into a period of heightened volatility amid fears of a prolonged US/Israel-Iran conflict,” analysts said.
They warned that a sustained war, particularly one that leads to a full closure of the Strait of Hormuz, which handles 20% of global oil supplies and 40% of India’s crude imports, could push Brent crude beyond $100 per barrel.
Such a development could trigger sharp rupee depreciation, imported inflation, and FPI outflows. Sectors such as aviation, chemicals, paints, and oil marketing companies (OMCs) may bear the brunt, while upstream oil producers and gold stocks could benefit.
Experts added that if oil sustains above $90, corporate earnings and consumer demand may weaken, increasing the likelihood of the Sensex sliding below the 75,000 mark.
Is It Time for Bottom Fishing?
Market veterans are urging caution, saying that catching a falling knife has its peril.
Some analysts say that it is still not the time for bottom fishing in the current market, as they expect the market to fall further.
Investors should stay on the sidelines rather than trying to catch a falling knife, market pundits say, adding that it’s better to buy higher when there is clarity and when volatility reduces in global markets rather than buying in falls.
(Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Prior to making an investment, conduct thorough research and consult with your financial advisor.)
Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
