Market crash: Investors lose over ₹21 trn in 3 days on West Asia tensions
The combined market capitalisation of all BSE-listed companies has fallen by more than ₹21 trillion over the past three sessions
 "Market crash: Investors lose over ₹21 trn in 3 days on West Asia tensions")
Indian equity benchmark indices, Sensex and Nifty, tumbled more than 1 per cent each on Wednesday due to across-the-board selloff amid escalating West Asia conflict, wiping out more than ₹9 trillion in market capitalisation. The 30-share BSE Sensex declined 1,122.66 points or 1.40 per cent to end at 79,116.19. Likewise, the 50-share NSE Nifty lost 385.20 points or 1.55 per cent to end at 24,480.50. As of March 4, the combined market capitalisation of all BSE-listed companies stood at ₹446.98 trillion, down by ₹9.1 trillion from Monday's all India market capitalisation of ₹456.17 trillion. In the past three trading sessions, the market sell-off has erased investors' money by more than ₹21 trillion, according to exchange data.
On March 2, the BSE Sensex slumped over 1,795 points, to the day's low of 78,443.20, while the NSE Nifty 50 slid over 560 points, slipping to the 24,305.40 levels.
From a closing level of 82,248.61 on February 26, the Sensex has shed more than 3,805 points or 4.6 per cent. The Nifty has declined about 1,191 points or 4.7 per cent over the same period.
Here's why markets are falling:
The sell-off comes amid rising global risk aversion after escalating US–Israel strikes on Iran revived fears of oil supply disruptions. Brent crude traded near $81 per barrel, while WTI crude climbed above $75, extending recent gains amid shipping risks in the Strait of Hormuz.
US equities ended lower on Tuesday despite trimming early losses, with the Dow Jones down 0.8 per cent, the Nasdaq slipping 1 per cent, and the S&P 500 declining 0.9 per cent. European wholesale natural gas prices surged 40 per cent, intensifying inflation concerns.
Devarsh Vakil, head of prime research at HDFC Securities, said higher crude prices pose tangible macroeconomic risks for India. Every $1 rise in crude increases India’s annual import bill by roughly $2 billion. A 10 per cent jump in oil prices could raise CPI and WPI inflation by 40-80 basis points and widen the current account deficit by around 30 bps.
Sectors such as paints, lubricants, aviation and chemicals may face margin pressure, given that oil-linked inputs account for 40-70 per cent of their raw material costs, Vakil said. Prolonged tensions could also pressure the rupee and trigger capital outflows if energy prices remain elevated.
However, according to Anand Rathi Research, historical evidence does not indicate a high probability of a deep or sustained correction in Indian equities purely on geopolitical grounds. Corrections during past conflicts were typically shallow, sentiment-led and temporary.
Indian equities are driven more by sustained energy shocks and global liquidity than by war headlines, the brokerage said.
"Short-term corrections of 5-7 per cent, temporary FPI outflows and volatility spikes remain plausible under heightened uncertainty. Structural market damage would require a prolonged crude oil shock materially widening the current account deficit and reigniting inflation pressures," it added.
Absent such a scenario, markets have historically followed a pattern of an initial shock, rapid repricing and subsequent stabilisation.
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