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War concerns, surging crude prices: Why stock markets are nosediving again

All sectoral indices of both the NSE and BSE are in the red. Analysts say markets are heading into a period of heightened uncertainty amid the war.

The benchmark BSE index was down 1.8%. Sankhadeep Banerjee

3 min readMumbaiMar 4, 2026 11:39 AM IST First published on: Mar 4, 2026 at 11:39 AM IST

The Indian stock market is sharply down for the second straight session as the war in west Asia intensifies and raises concerns about potential shocks to crude oil supplies.

The indices have so far fallen 3% during that run. Investors have been concerned about the situation in the region, with the conflict deepening over the past few days and more parties becoming involved.

Crude woes

If the conflict drags on for a substantial period, crude oil prices will also remain elevated, hurting India Inc substantially, according to global firm CLSA. Crude prices have now already crossed the $75 a barrel mark and may cross the $100 a barrel mark if the conflict is prolonged.

Also Read | Expert Explains: ‘The Strait of Hormuz is simply too vital an artery to remain closed for too long’

Crude is an important raw material and fuel for a host of industries such as automobiles, paints, chemicals, cosmetics, aviation, and oil refining, among others. Every $1 increase in oil price is estimated to inflate the oil import bill by up to $2 billion on an annualised basis.

On Wednesday, the benchmark Nifty 50 index had fallen as much as 2.3% at its intraday low and currently trades at 24,415.20 points, down 450 points or 1.8% at 11 AM. L&T is down over 6%, falling sharply for the second-straight session as around 33% of the engineering conglomerate’s order book constitutes orders for the Middle East. IndiGo operator Interglobe Aviation was also down around 5%.

On the BSE, SpiceJet, which is the only other listed Indian airline operator, is down 6%. The benchmark Sensex index remains down 1.8%. All sectoral indices of both the NSE and BSE are in the red.

Corporate earnings

“With the war escalating and crude rising, markets are going into a period of heightened uncertainty. Nobody knows how long this conflict will go on and what will be the extent of havoc it could wreak. From the perspective of India, which relies on imports for around 85% of its oil requirements, the real concern is the potential inflation and its consequences on economic growth,” said V K Vijaykumar, chief investment strategist at Geojit Financial Services.

“From the market perspective, the impact of potentially widening trade deficit, depreciating currency, higher inflation, and perhaps lower growth is the real issue,” he said.

Also Read | Strait of Hormuz oil flows dry up: How this affects India, and the options ahead

“If this fear materialises, corporate earnings will be impacted. This is the fear in the market. This fear will materialise only if the war lingers for long. If it ends in, say, 3 to 4 weeks, things will be back to normal,” said Vijaykumar.

The escalating situation in the Middle East has made investors averse to risks across all markets. Foreign institutional investors, who had returned to Indian equities after a long time in February, have pulled out over $1 billion from the market, adding further pressure. Domestic institutional investors, however, have kept buying and have supported the market.