'Second only to Covid': Rs 47 lakh cr stock market cap gone in Iran war! What analysts say

With the Iran war now entering its fourth week, Indian investors have lost nearly Rs 48 lakh crore in stock value, equivalent to $511 billion at the record low rupee level of 93.94 hit earlier today. This has led some analysts to compare the current situation to Covid-19, citing the many unknowns.

Iran was begin on February 28. On Monday, the market capitalisation (m-cap) of all listed companies on BSE stood at Rs 4,15,54,464 crore compared with Rs 4,63,50,671 crore on February 27, down 10.34 per cent. 

Mihir Vora, CIO at Trust Mutual Fund, told Business Today that this is one of the most uncertain periods seen in recent times, and that stock investors’ concerns are fully justified.

"I would say that in terms of the uncertainty, this is almost probably the second only to the Covid-19, where you really did know what was happening. In the Global financial crisis, we knew that the problem was with certain group of companies. Covid was an 'unknown unknowns'. What we are seeing in Strait of Hormuz is probably next only uncertainty we saw in Covid. We have never seen energy supplies has been constraint for such a long period of time,"  

Vora said its impact has been visible in oil and gas prices globally. 

"We are in uncertain times and we have seen the markets recover after such uncertain times. It  is just that when you are going through it, it looks very painful and fully justified. But that is when we probably need to then step back and look at the bigger picture. If we could survive a thing like Covid, if could survive and emerge strong from GFC, we may likely survive this too again," Vora said.  

There is nothing that investors can do during this crisis characterised by huge uncertainty, said Vijayakumar, adding that the crash in the safe haven gold is worse than in equities. 

"If history is any guide investors should not panic, but keep cool," he said. 

The analyst said sharp depreciation in the rupee will benefit exporters like pharmaceuticals and autos and auto ancillaries. The beaten down IT segment may surprise with a bounce back.  

Deepak Shenoy of Capitalmind Mutual Fund in a post on X said it is times like this that need resilience: walking the tough times is what it takes, and what it has  always taken.

"Sometimes the best changes can come in a crisis. Policy, governance, reform in the government led areas, capital opportunities and strategy changes in businesses, rebalancing, weeding out and opportunity identification in investing, a strong relook at personal finance allocations for individuals. The headlines look bad, but bad is what makes the good good," he said.

Systematix in a weekly note said external vulnerability continued to mount amid ballooning cost pressures. Even if the war concerns de-escalate, the rebuilding of facilities and trade realignment will take time, it said. Sustained high prices risks current account deficit (CAD), depreciating rupee, and growth/inflation trade-offs, the domestic brokerage said. 

"Without structural fixes, repeated oil shocks will recurrently pressure the external sector. Potential duty tweaks, export incentives, or subsidies would ease the growth and inflation concerns. However, the government’s fiscal bandwidth also remains constrained," it noted.

SMC Global's Saurabh Jain in a weekly note said  there is growing concern that sustained high energy prices may adversely impact India’s growth momentum while fueling inflationary pressures, thereby creating a challenging environment for both policymakers and investors. 

He said the near-term outlook for the Indian stock market remains cautious amid persistent geopolitical uncertainties and elevated crude oil prices. The trajectory of the Indian rupee and energy prices will be key monitorables, he added. 

"Going ahead, to pause the ongoing corrective phase, Nifty needs to decisively close above previous sessions high (23,345). A failure to do so would result into extended correction wherein key support is placed in the zone of 22,700-22,500 being 80 per cent retracement of the April 2025-February 2026 up move (21,743-26.373)coincided with support trend line drawn adjoining 2024-25 lows (21,137-21,743), ICICI Direct said earlier today.