Indian Stocks Plunge Amid Escalating US-Israel-Iran War, Rs 6.5 Lakh Crore Wiped Out

The Indian stock market experienced a substantial sell-off on Monday, March 2, 2026, as geopolitical tensions in the Middle East intensified, with an active US-Israel war on Iran sending shockwaves across global financial markets. The benchmark Sensex, after plunging by as much as 2,743 points at the open, ultimately closed 1,048.34 points (1.29%) lower at 80,238.85, marking its lowest level since September 2025. Similarly, the Nifty 50, which opened with a significant dip of 519 points, settled at 24,865.70, down 312.95 points (1.24%), falling below the crucial 24,900 mark. During intraday trading, Nifty 50 even touched a low of 24,645.10. The market downturn resulted in a significant erosion of investor wealth, with the total market capitalization of all BSE-listed companies shrinking by more than Rs 6.5 lakh crore. This widespread selling pressure was a direct consequence of the escalating conflict, which included US-Israeli missile strikes on Iran and the reported death of Iran's Supreme Leader Ayatollah Ali Khamenei. The conflict also saw Iran retaliate with missile and drone attacks across multiple Gulf nations. Foreign institutional investors (FIIs) played a role in dampening sentiment, with reports indicating strong FII selling. The escalating Middle East conflict led to a sharp increase in global crude oil prices, which is a major concern for India, as the country imports over 80% of its crude oil needs. A surge in oil prices directly impacts India's inflation, fiscal balance, and corporate earnings. Concurrently, the Indian Rupee weakened, slipping to approximately 91.2 per dollar in early trade and later 91.47 per U.S. dollar, its lowest in a month. The market's reaction was broad-based, with almost all sectoral indices trading in the red. Nifty Midcap and Smallcap indices also plunged by about 2% each. Sectors such as auto, oil and gas, and banking stocks were particularly affected. Heavyweights like Larsen & Toubro, Reliance Industries, HDFC Bank, Adani Ports, Asian Paints, Maruti Suzuki, and Ultratech Cements were among the top losers. However, some resilience was observed in defence-related stocks, with Bharat Electronics Limited (BEL) emerging as a key gainer due to increased investor optimism in the sector amidst geopolitical risks. Energy and IT firms, along with export-driven companies, were also noted as potential relative beneficiaries in such a volatile environment. Analysts have cautioned investors to avoid panic selling, emphasizing that historically, markets tend to recover from such geopolitical crises within a few months. Experts suggested that market weakness could present an opportunity to accumulate high-quality stocks in domestic consumption themes, including banking, automobiles, capital goods, and defence. This event underscores the significant impact of global geopolitical events on the interconnected Indian financial markets, particularly through channels like crude oil price volatility and global risk aversion. The situation requires strategic policymaking to navigate uncertainties and maintain investor confidence.

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