How US-Iran war impacted on Sensex, Nifty, investors' wealth, INR, oil and more - What has changed so far

Oil prices are up 31 per cent, the rupee has depreciated 2 per cent and foreign outflows from Indian market stood at whopping Rs 1.61 lakh crore since the US-Israel joint strikes on Iran started under "Operation Epic Fury" on February 28. Yet, investor wealth, as suggested by the BSE market capitalisation, has fully recovered and is at pre-war levels, notwithstanding doubts over the fragile two-week ceasefire between the US and Iran that ends on April 21. 

BSE benchmarks Sensex and Nifty have cut losses and are down a mere 3 per cent since February 27, likely due to strong domestic buying, data compiled by Business Today showed.

Market rebounds, FPIs stay away
Data showed the BSE m-cap stood at Rs 4,67,68,942 crore on Monday, up Rs 4.18 lakh crore over Rs 4,63,50,671 crore as on February 27. This is even as FPIs have collectively sold Rs 1,61,194 crore worth of domestic equities during the same period. Rupee declined from a level of 91.07 on February 27 against dollar, to hit a record low of 95.220 on March 30, before recovering to 92.92 level against the greenback, a depreciation of 1.99 per cent for the period. 

India crude oil basket stood at $100.41 as on Friday compared with an average of $69.01 a barrel in February, as per PPAC. As per EIA, US regular conventional retail gasoline prices stood at $3.962 per gallon for the week ended April 13 against $2.884 for the week ended March 2. 

SIP inflows come to rescue

"Continued FII selling, both during the sell-off as well as bounce-back phases of the Indian market over the past 45 days, was largely ‘absorbed’ by domestic MFs, driven by strong active and passive inflows (including EPFO allocation to equities) and modest decline in cash levels," Kotak Institutional Equities said.

The war, which saw many tense moments, with the US President Trump suggesting  "a whole civilisation will die tonight, never to be brought back again", roiled global markets. While midterm elections in the US in November later made market participants complacent that the peak of the US-Iran war is past us, and a peace deal is on the horizon, the situation still stays liquid. 

DYI investments

A second round of US–Iran negotiations is scheduled to begin today, but Tehran has rejected participation, leaving the ceasefire deadline set for Tuesday with no clear path to extension, said Devarsh Vakil, Head of Prime Research, HDFC Securities. 

"FPIs may continue to keep a nuanced stance towards India until India’s earnings outlook and valuations versus other major EMs improve materially, Kotak said adding that cash levels of MFs have come off, resulting in lower," buffers against continued FPI selling.

The domestic brokerage noted that the active retail investor base shrank in FY26, suggesting a gradual weakening in the DIY-investing trend seen over FY2021-25.