Sensex, Nifty Fall 3% as Oil Surge Hits Markets

India’s benchmark equity indices declined sharply this week as rising crude oil prices and escalating tensions in West Asia weighed on investor sentiment.

The BSE Sensex dropped 1,097 points (1.37%) on Friday to close at 78,918, while the Nifty 50 fell 315 points (1.27%) to settle at 24,450.

For the week, both indices slipped by nearly 3%, marking their steepest weekly decline in more than a year.

Investor Wealth Sees Major Erosion

The market downturn led to a significant drop in overall investor wealth.

Estimates suggest that investors lost nearly ₹14 trillion in market value during the week, including ₹3.2 trillion on Friday alone.

Foreign portfolio investors (FPIs) were major sellers, offloading equities worth around ₹21,831 crore during the week, with nearly ₹6,000 crore sold on Friday.

However, domestic institutional investors remained net buyers throughout the week, offering partial support to the markets.

Oil Price Surge Drives Market Anxiety

The sell-off in Indian equities coincided with a sharp jump in global crude oil prices amid ongoing geopolitical tensions in the Middle East.

Benchmark Brent crude rose above $90 per barrel, reaching its highest level in nearly two years. Meanwhile, West Texas Intermediate crude crossed $85 per barrel, its highest since April 2024.

Market participants said the surge in oil prices is raising concerns about global energy supply disruptions.

Geopolitical Tensions Disrupt Energy Supply

Reports suggest that tanker movements in the Gulf region have been affected, with some vessels diverting routes away from the Persian Gulf toward alternative ports.

Additionally, drone and missile attacks have reportedly targeted refineries in countries such as Saudi Arabia, Kuwait and Bahrain, leading some facilities to scale back production.

The near halt of traffic through the Strait of Hormuz has further increased concerns over oil supply disruptions.

Why Rising Oil Prices Matter for India

Higher oil prices can have significant implications for India’s economy.

As a major oil-importing nation, India could face wider trade deficits, rising inflation and pressure on fiscal balances if crude prices remain elevated for a prolonged period.

Market experts also warn that a sustained increase in oil prices could weaken the currency and affect economic growth.

Banking and Oil Stocks Lead Losses

Banking stocks were among the biggest contributors to the market decline.

Shares of major lenders such as ICICI Bank, HDFC Bank, Axis Bank and State Bank of India declined during the session.

Analysts said financial stocks came under pressure due to concerns that rising oil prices could push up borrowing costs and affect credit growth.

Oil marketing companies also extended losses as higher crude prices could compress their margins.

Meanwhile, stocks such as InterGlobe Aviation and Larsen & Toubro fell more than 2%, adding to the market weakness.

Analysts Warn of Continued Market Uncertainty

Market analysts said geopolitical risks remain a key concern for investors.

Experts also highlighted that Indian equities were already facing challenges such as high valuations and global economic uncertainty.

If the conflict continues and oil prices remain elevated, analysts believe it could further impact investment sentiment and market stability in the coming weeks.