Indian benchmark indices continued their losing streak on Friday, with equities slipping sharply as investors turned cautious amid escalating tensions in the Middle East and a fresh surge in global crude oil prices.
By 11 am, the Nifty 50 was trading 1.19 per cent lower at 23,356, while the BSE Sensex declined 1.07 per cent to 75,266. The sell-off erased nearly Rs 5.87 trillion in investor wealth. The total market capitalisation of companies listed on the Bombay Stock Exchange (BSE) dropped to around Rs 433.85 trillion, compared with Rs 439.72 trillion at Thursday’s close.
Sectoral indices indicated broad-based selling pressure. Except for FMCG stocks, all sectors were trading in the red, with metal stocks leading the decline. Banking stocks also remained under pressure amid rising inflation concerns. Major lenders such as HDFC Bank, ICICI Bank, Punjab National Bank, and IndusInd Bank were among the biggest laggards.
The weakness extended beyond frontline stocks. The Nifty Midcap 150 index fell 1.61 per cent, while the Nifty Smallcap 250 index dropped 1.67 per cent, reflecting a wider risk-off sentiment among investors.
Notably, the Nifty 50 has already entered a technical correction phase, having declined more than 10 per cent from its January 5 high of 26,373. In market terms, a technical correction refers to a short-term fall of 10–20 per cent in an index from its recent peak.
Key Reasons Behind Friday’s Market Decline
Weak Global Cues
Asian markets traded sharply lower on Friday as investors reacted to rising oil prices and fears that an extended conflict involving Iran, the United States, and Israel could hamper global economic growth.
Japan’s Nikkei 225 fell nearly 2 per cent, while the broader TOPIX index declined about 1.4 per cent. South Korea’s KOSPI dropped almost 3 per cent, and Hong Kong’s Hang Seng Index also traded in the red. Indian markets mirrored the weakness seen across Asian peers.
The domestic market decline also followed a sharp overnight fall on Wall Street. The Dow Jones Industrial Average plunged nearly 740 points, closing below the 47,000 mark for the first time this year. The S&P 500 lost around 1.5 per cent, while the Nasdaq Composite also ended lower.
Global risk sentiment has remained fragile as investors reassess the potential economic fallout of rising geopolitical tensions.
Escalating Iran Conflict
The conflict involving Iran entered its second week with no signs of easing, keeping global financial markets on edge. Iran’s new Supreme Leader Mojtaba Khamenei warned of further escalation and indicated that Tehran could open additional fronts in the conflict. Meanwhile, Israeli Prime Minister Benjamin Netanyahu said Israel’s attacks were aimed at weakening Iran’s leadership.
The prolonged confrontation has already disrupted key global energy supply routes, including the Strait of Hormuz, increasing uncertainty across financial markets. Since the latest conflict began on February 28, both the Nifty 50 and BSE Sensex have witnessed notable declines as investors reduce exposure to riskier assets.
Surging Crude Oil Prices
Crude oil prices have surged amid concerns that the conflict could disrupt supplies passing through the Strait of Hormuz, a crucial route for global oil shipments.
The international benchmark Brent crude crossed the $100-per-barrel mark on Friday morning following a volatile trading week. Meanwhile, the US benchmark West Texas Intermediate (WTI) was trading close to $96 per barrel.
Higher oil prices pose a major challenge for India, which imports the majority of its crude oil. A sustained surge in crude prices can widen the trade deficit, fuel inflation, and put pressure on the rupee—factors that typically weigh on equity markets.
Market experts believe investors may remain cautious until there is greater clarity on the geopolitical situation and the direction of global energy prices.
Shravan Shetty, Managing Director at Primus Partners, said, “Markets are continuing to decline, with the Nifty down nearly 4.5 per cent this week. The uncertainty surrounding the war and the resulting oil shock are impacting investor sentiment. With supply from Middle Eastern producers tightening and uncertainty over the reopening of the Strait of Hormuz, further correction cannot be ruled out as the global economy faces both weaker demand and rising inflation.”
According to market analyst Nidhi Sharma, Foreign Institutional Investors (FIIs) have also been reducing exposure to emerging markets, including India.
“Global uncertainties and relatively higher yields in developed markets, particularly the United States, are drawing foreign capital away from emerging economies. Continuous FII selling tends to put pressure on large-cap stocks and contributes to broader market weakness,” she said.