The apprehension was already there. After the joint US–Israel attack on Iran last Saturday, a section of investors had begun fearing a major stock market crash amid rising geopolitical uncertainty. Their fears appeared to come true as soon as Dalal Street opened on the first trading day of the week.
The Sensex and Nifty plummeted sharply, wiping out nearly Rs 6 lakh crore in market capitalisation in a single session. According to news agency reports, the Sensex fell 1,048 points to settle at 80,238, while the Nifty declined 313 points to end at 24,865.
Market experts have attributed the sharp fall to multiple global and domestic factors.
Geopolitical shockwaves after US–Israel strike on Iran
Last Saturday, joint US–Israeli forces launched an attack on Iran, triggering immediate retaliation from Tehran. Reports suggest that US naval bases across several West Asian nations, including the UAE, Kuwait, Qatar and Bahrain, were targeted.
The geopolitical situation has since grown increasingly complex. The reported death of Iran’s Supreme Leader Ayatollah Ali Khamenei in the joint strike has further escalated tensions. Analysts believe fears of a larger retaliation have prompted investors to resort to profit booking and portfolio liquidation as a defensive strategy.
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Brent crude surges 10% as Strait of Hormuz tensions escalate
Crude oil prices spiked sharply following the escalation in West Asia. Reports indicate that Tehran attacked a Palauan oil tanker in the Strait of Hormuz near the Omani coast on Sunday, raising concerns about the safety of oil shipments through the critical trade route.
Brent crude futures reportedly jumped 10 per cent to touch $82 per barrel on Monday. The surge has sparked concerns in India, which imports a significant portion of its crude oil requirements, much of it routed through the Strait of Hormuz.
Experts warn that a $10 per barrel increase in crude prices could raise India’s annual import bill by Rs 10,000–15,000 crore. Rising oil prices typically fuel inflationary pressures and strain the fiscal balance, dampening investor sentiment.
Rupee slides past 91 against dollar amid uncertainty
Amid escalating tensions, the Indian rupee weakened sharply, slipping past the 91 mark against the US dollar for the first time in a month.
A weaker rupee increases the cost of dollar-denominated imports, including crude oil, thereby adding further pressure on the economy. The currency movement contributed to the cautious mood among investors, intensifying selling activity during the session.
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Persistent FII selling adds to market pressure
Foreign institutional investors have been net sellers in Indian equities over the past year. According to market estimates, their cumulative selling has crossed Rs 1.5 lakh crore in 2025.
While domestic investors continue to provide support, heavy foreign outflows tend to amplify market declines during periods of negative global developments. Analysts say that any adverse geopolitical news currently triggers disproportionate selling pressure, pulling key indices lower.
The combination of geopolitical escalation, rising crude prices, currency weakness and sustained foreign outflows created a perfect storm for Dalal Street, leading to Monday’s sharp decline.
