West Asia war: Sensex enters correction territory, Nifty on verge

Sensex falls 1,342 points and enters correction territory as rising oil prices and continued tensions in West Asia trigger a broad sell-off across Indian equities

After a brief one-day reprieve, Indian equities resumed their slide on Wednesday, pushing the Sensex into correction territory as the West Asia conflict showed little sign of easing, oil prices stayed elevated and Iran’s military command warned the world to brace for crude at $200 a barrel — despite US President Donald Trump’s assertion that the war may be nearing an end. 

The Sensex closed at 76,864, down 1,342 points or 1.7 per cent — its steepest fall since February 1, when the FY27 Union Budget was presented. The Nifty 50 ended at 23,867, shedding 395 points or 1.6 per cent, its sharpest decline since March 9. 

 

Since the conflict began, the Sensex has dropped 5.4 per cent and the Nifty 5.2 per cent. From their respective record closing highs, the Sensex has now fallen 10.5 per cent, entering correction territory, while the Nifty 50 is down 9.3 per cent. 

A fall of 10 per cent from recent highs is typically defined as a “correction”, a technical signal used by market participants to mark a phase of weakness. 

Investor anxiety was also visible in the India VIX, the volatility gauge, which jumped 11.4 per cent to 21.06.

 

The selloff erased ₹5.14 trillion in investor wealth in a single session, taking the total market capitalisation of BSE-listed companies down to ₹442 trillion. Since the outbreak of the war, market capitalisation has shrunk by ₹21.6 trillion.

 

Foreign portfolio investors remained net sellers, offloading about ₹6,267 crore of equities on Wednesday, while domestic institutions bought shares worth ₹4,966 crore.

 

Despite Trump’s claim that the military campaign in Iran was advancing faster than his earlier four-to-five-week timeline, and that he may be open to talks with Tehran, there are few visible signs of de-escalation on the ground. Nor is there any indication that shipping through the Strait of Hormuz, which handles nearly a fifth of global oil supplies, has resumed normally. Three more vessels reportedly came under attack in the blockaded Gulf.

 

Reports on Wednesday said Iran had fired missiles at Israel and other targets across West Asia despite intense strikes by US-Israeli forces. “Get ready for oil be $200 a barrel, because the oil price depends on regional security which you have destabilised,” Ebrahim Zolfaqari, spokesperson for Iran’s military command, said in remarks directed at the US.

 

Brent crude traded at $90.7 a barrel, even as reports suggested the International Energy Agency could release emergency reserves of up to 400 million barrels. For India, heavily dependent on imported oil, higher crude prices raise inflation risks and weigh on growth.

 

“Prolonged Strait of Hormuz interruptions beyond mid-March, delayed energy supply normalisation from affected producers, and persistent uncertainty could strain India’s external sector, spilling over into the domestic economy and fiscal pressures,” said Garima Kapoor, deputy head of research and economist at Elara Capital.

 

Market breadth remained weak, with 2,423 stocks declining and 1,850 advancing on the BSE. All but three Sensex constituents ended lower, with HDFC Bank, down 1.8 per cent, emerging as the biggest drag on the index.

 

“The Nifty is once again inching towards its previous swing low around 23,700. A break below this level could trigger the next leg of decline towards 23,500, followed by the 23,200 zone. On the upside, any recovery towards the 24,100-24,300 band is likely to face strong resistance,” said Ajit Mishra, SVP of research at Religare Broking.