The Indian markets plummeted due to US-Israel attacks against Iran, creating geopolitical tension to hike crude oil and depreciate the rupee. Analysts are concerned that macro risks would be experienced in case the war continues, and energy, defence, and IT stocks are likely to be relative winners, while OMCs, airlines, and export-related companies are under pressure now.

India Markets Plunge as US‑Israel Strike on Iran Sends Crude Soaring

Monday opened with the stock markets of India crashing and the rupee at a one-month low as the world began to be re-invented overnight with the United States and Israel striking Iran, killing its Supreme Leader Ali Khamenei, and triggering retaliatory attacks in at least seven nations. As the Strait of Hormuz has now become the target of an expanding war, crude oil has just become the most significant variable of the macro-financial stability of India, and even stock market investors in the immediate future.

The first post-strike session of the strikes saw the soaring of the Brent crude futures by 6 percent to hit 77 a barrel. Goldman Sachs estimated a real-time risk premium that is reflected in prices of 18 dollars a barrel, on Sunday, and stated that in case 50 percent of the flows through the Strait of Hormuz is stopped in a month, a premium of about 4 dollars could be received. Citi analysts, in their turn, mark their base-case price of between $80 and 90 per barrel in the next one or two weeks at least, and indicate a pullback to 70 on de-escalation.

Sensex Drops 900 Points Amid Iran Crisis; Investors Urged to Stay Calm

Sensex​‍​‌‍​‍‌​‍​‌‍​‍‌ dropped nearly 900 points and Nifty also shed 1% to 24,900 with banks, autos and oil marketing companies (OMCs) leading the fall. The rupee depreciated by 0.3% to 91.2350, its lowest level since early February.

"The markets will be under the shadow of the war in West Asia and its consequent uncertainties in the short term," noted Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments. For the market, the biggest energy risk comes from the increase in crude. 

However, if the Hormuz Strait is closed, for example, resulting in 20% spike in crude, the markets will react accordingly. But nothing is confirmed yet. So, if Brent crude stays at around $76, markets will be weak but will not crash significantly.

Vijayakumar advised investors to stay calm and keep their investments steady. "Panic selling during a crisis is the wrong approach and has been proven by past experiences. The crisis data of recent decades show that this sort of event will have no impact on the market after 6 months. That’s the lesson we can learn from the virus, the Russia-Ukraine and the Gaza conflict crises," he said.

According to him, the forthcoming market correction can turn into an opportunity to add up high-quality stocks in sectors of domestic consumption like banking, automobiles, capital goods and ​‍​‌‍​‍‌​‍​‌‍​‍‌defence.

The​‍​‌‍​‍‌​‍​‌‍​‍‌ general consensus on the street is that this comes to an end quickly but the risk that it might not is exactly what is disturbing the investors.

Seshadri Sen of Emkay Global said, "We anticipate the hostilities to cease in 1 to 2 weeks and the markets to recover by a large margin just like they did in Oct 23 and Jun 25." 

However, "a prolonged war would bring about serious macroeconomic risks to India."

Sen sees the Nifty reaching 24,500 to 25,000 levels as a base case, and it could go lower if the confrontation lasts beyond 1 to 2 weeks. The macro arithmetic is brutally clear: with every increase of $10 per barrel in crude, India's current account deficit widens by 0.5% of GDP while the pressure on the rupee and domestic inflation also rises.

Sensex, Nifty today: Catch all the LIVE stock market action here 

Iran, Israel, US war winners and losers

The war has led to a sharply divided market. The most obvious beneficiaries were the two upstream energy producers, ONGC and Oil India, with JM Financial pointing out that every $1 per barrel increase in Brent raises their earnings per share by 1.5 to 2% each and also that the $75 per barrel cap on their realisations is no longer applicable. Defence players like BEL, HAL, and Data Patterns are also expected to benefit, with Jefferies pointing out that India's defence spending increased by 18% year-on-year in FY26 and further double-digit growth is budgeted, even as India's 0.6% of GDP defence capex spend is still way below its previous peak of ​‍​‌‍​‍‌​‍​‌‍​‍‌1%. 

Final Thoughts 

To sum up, the US-Israeli conflict with Iran is creating a lot of volatility in the Indian stock markets, and crude oil prices, the depreciation of the rupee, and geopolitical uncertainties are burdening the sentiment of the investors. Although the market response has been harsh in the short term, analysts are of the view that panic selling is the wrong action, given that the market usually recovers within half a year after such crises affect it. There exists the possibility of additional market corrections, and this is where an investor will have the opportunity of investing in quality stocks in the business sector, like banking, automobiles, capital goods, and defense, that may come out as the relative winners in the long run. The most important risk, however, is the length of the war, with the long war being a severe macroeconomic burden to India, especially with increased prices of crude oil, inflation and an increased current account deficit. The future of the situation mostly depends on the speed at which the situation in West Asia will stabilize and whether the hostilities will reduce in the next one to two weeks as expected. To investors, it is recommended to remain composed, closely observe developments, and not jump at the knee-jerk reaction in this period of uncertainty.