Iran concerns jolt markets; Sensex, Nifty see worst day since Budget

Escalating US-Iran tensions, rising crude prices and fears of FPI reversal dragged indices lower, with markets posting their steepest decline since February 1

Indian equities slumped on Thursday, with the benchmark Sensex and Nifty logging their sharpest single-day fall since the Union Budget, as fears of potential US intervention in Iran and its implications for global oil supplies unnerved investors. 

Heightened geopolitical uncertainty and its possible impact on foreign portfolio investor (FPI) flows further weighed on sentiment. The Sensex closed at 82,498, down 1,236 points, or 1.5 per cent, while the Nifty ended at 25,454, shedding 365 points, or 1.4 per cent. For both indices, Thursday’s decline was the steepest since February 1. 

The total market capitalisation of BSE-listed companies fell by ₹6.8 trillion to ₹465 trillion. 

Investor anxiety has intensified amid concerns that escalating tensions between the US and Iran could push up inflation by disrupting oil supplies. Brent crude traded at $71 per barrel on Thursday, its highest level since August 1, 2025. Prices have risen nearly 5 per cent over the past two sessions following reports that US intervention in Iran could occur sooner than expected.

 

Higher crude prices pose a challenge for India, which imports the bulk of its oil requirements. Iran’s state media reported that the country briefly shut the Strait of Hormuz on Tuesday, a critical passage through which nearly a fifth of global oil supply flows. Any prolonged disruption could also complicate the US Federal Reserve’s monetary policy outlook. Minutes of the Fed’s January 27-28 meeting showed several officials flagging the possibility that interest rates may need to be raised.

 

“Quite a lot of oil passes through the Strait of Hormuz, and that has been a concern. Investors are already worried about AI-led disruption for IT services firms, which form a significant part of the index. While a trade deal with the US has been agreed upon, uncertainty remains on how it will play out,” said U R Bhat, co-founder of Alphaniti Fintech.

 

Bhat added that heightened geopolitical tensions could prompt FPIs to pull back from Indian equities.

 

“Incremental market gains come only when FPIs are buyers, and foreign investors have only recently turned net buyers. If they reverse course again, more pain could be in store. The Iran situation needs to settle quickly,” he said.

 

Some market participants, however, believe that US President Donald Trump may not allow a sustained spike in oil prices ahead of the mid-term elections later this year.

 

On the stock-specific front, Reliance Industries fell 2.1 per cent and was the largest drag on the Sensex, followed by HDFC Bank, which declined 0.9 per cent. All 30 Sensex constituents ended the session in the red.

 

FPIs were net sellers of equities worth ₹881 crore, while domestic institutional investors sold shares worth ₹596 crore.

 

Market breadth remained weak, with 3,011 stocks declining against 1,209 advances.

 

“Going ahead, the 25,350-25,300 zone will act as immediate support for the Nifty. A sustained move below 25,300 could trigger a deeper correction towards 25,150, followed by the 25,000 level in the near term,” said Sudeep Shah, head of Technical and Derivatives Research at SBI Securities.