Sensex, Nifty hit by Iran missiles: 5 reasons why stock market is falling today

A sharp surge in crude oil prices, Fed official remarks, sustained weakness in rupee and foreign outflows, geopolitical tensions in West Asia and equity selloff in Asia dragged domestic indices Sensex and Nifty lower by 2 per cent each on Monday morning. At 9.23 am, the BSE Sensex was trading at 75,155.28, down 1,548.85 points or 2.02 per cent. Nifty was quoting at 23,319.45, down 458.35 points or 1.93 per cent.

Private banks led the losers, with HDFC Bank Ltd alone contributing 373 points negatively to the Sensex decline. ICICI Bank and Axis Bank contributed another 220 points. HDFC Bank fell 3.65 per cent to Rs 812.50. L&T, Axis Bank, Eternal Ltd and Bajaj Finance Ltd were other key index losers.

Oil price rally
VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited noted that the uncertainty surrounding the Iran war has turned worse with Israel hitting the world’s largest LNG refinery in Iran. Brent crude has shot up to $113. This is bad news for oil and gas importers like India, Vijayakumar said. 

"If Brent remains above $110 for an extended period of time, that will have negative implications for India’s macros. India’s GDP growth and corporate earnings in FY27, too, will be impacted. But this scenario need not play out in the fast changing scenario," he said. 

West Asia crisis
Tensions in West Asia have intensified, following attacks on Iran’s South Pars gas field. Reports also indicate retaliatory strikes, with Qatar later suggesting that Iranian missile attacks on the Ras Laffan Industrial City, its main gas facility, have caused “significant damage.”

State-run QatarEnergy said an Iranian attack Wednesday on its Ras Laffan Industrial City caused extensive damage to the Pearl GTL, the world's largest gas-to-liquids plant. A new wave of missile attacks early Thursday on several liquified natural gas facilities at Ras Laffan also caused sizable fires and extensive further damage, it said in a statement.

Fed Chair commentary
In the presser, Fed Chair Jerome Powell noted that near-term inflation expectations have risen due to the Iran crisis. He also mentioned that there was not as much progress on inflation as hoped earlier, with the Iran crisis now adding to the inflationary pressures. He added that the rate cut forecast in the dot plot for 2026 would not happen without further inflation progress.

Emkay Global said the absence of a policy bias seems to be the message, and it is likely that the Fed will be on an extended pause till more clarity emerges around the effects of the Iran crisis (and fading tariff inflation).
  
FPI outflows
Foreign portfolio investors (FPIs) are dumping Indian equities like no tomorrow. With just 12 sessions into March, the institutional class has sold Rs 77,214 crore worth domestic bets, averaging Rs 6,434.50 crore every session, making investors wonder what lies ahead as seven more trading sessions are left in March, excluding public holidays of March 26 and March 31. 

"FPI equity flow to India has again turned negative in March (so far) and may remain volatile in the near term, given the heightened geo-political tensions in West Asia," said Antique Stock Broking on March 18.

Asia selloff
Asian markets fell up to 3 per cent tracking an overnight drop on Wall Street. Nikkei fell over 2 per cent, while Hong Kong's Hang Seng and South Korea's KOSPI dropped over a per cent. Dow Jones fell 1.6 per cent while S&P500 declined 1.36 per cent in overnight trading, following the outcome of the two-day Federal  Reserve policy review.