Prolonged West Asia strife could sink Sensex under 75,000

India’s equity market benchmark BSE Sensex could drop below 75,000 if tensions in West Asia persist for weeks, driving crude oil prices to $90 per barrel, according to market experts. Indian equity market faced the brunt of the ongoing conflict in West Asia with the benchmark BSE Sensex crashing more than 2, 700 points at opening while NSE Nifty50 fell nearly 520 points. The Sensex tumbled as much as 3.4% or 2,743.46 points to hit a low of 78,543.73, while the NSE Nifty dropped 519.4 points, or 2.06% to 24,659.25. The market later trimmed losses with Sensex settling 1,048 points lower at 80,239 and Nifty settling at 25,866, down 313 points. “The Indian market is heading into a period of heightened volatility, with the Sensex and Nifty already down 1–2% today amid fears of a prolonged US/Israel - Iran conflict. A sustained war, especially leading to a full closure of the Strait of Hormuz which carries 20% of global oil and 40% of India's crude imports could push Brent crude beyond $100 per barrel, triggering sharp rupee depreciation, imported inflation, and FPI outflows, severely impacting sectors like aviation, chemicals, paints, and OMCs while benefiting upstream oil and gold stocks, said Vaqarjaved Khan, Senior Fundamental Analyst, Angel One. Khan added that the Sensex could slide below 75,000 if tensions remain elevated, as a $90+ oil shock risks eroding corporate earnings and consumer demand. Main driving factors in the coming sessions include oil price trajectory, rupee stability (already at 91+ levels), FPI sentiment amid global risk-off and RBI intervention, he said. The rupee opened at 91.26 against the US dollar on Monday. Meanwhile, US President Donald Trump has signalled that the current tensions with Iran may drag on for weeks, with Washington bracing for a prolonged effort instead of a quick end. Ali Larijani, secretary of Iran’s Supreme National Security Council has also denied US media claims that he recently urged restarting nuclear negotiations with Washington. Monday’s crash of the Indian market was expected due to a full-blown crisis in the Middle East after US and Israeli forces targeted key Iranian sites over the weekend. The fall in the Indian market mirrored the global trend as Japan's Nikkei 225 and South Korea's Kospi fell as much as 2-3% in early trade before trimming some losses. Hong Kong and the Chinese market also opened in the red. The attacks from both sides have intensified geopolitical risks in West Asia and triggered immediate repercussions for global energy markets. The attacks have heightened fears of a Strait of Hormuz closure, a vital chokepoint through which nearly 20% of global crude oil flows daily. In early trading, Brent crude futures jumped 13% to trade above $82 a barrel, its highest level since January 2025. The prices pared some gains as the session progressed. For India, this spells trouble: soaring crude prices heighten inflation risks, driving up bond yields. Higher yields compress equity multiples, prompting investors to flee stocks. India imports 85-90% of its energy needs, with about 60% sourced from the Gulf region. Vinit Bolinjkar, Head of Research, Ventura said that the unprecedented weekend escalation has embedded a sharp ‘geopolitical risk premium’ into Indian equities. “With Brent crude spiking 10% toward $80/barrel and the Rupee testing 91.20, we expect the Nifty to test its 24,500 support as markets price in an energy-led inflationary shock. Sectorally, margin-sensitive players—specifically Paints and OMCs—face immediate pressure, as every $1 crude rise typically compresses EBITDA margins by 20–30 bps. Conversely, Upstream Energy and the Defense sector (bolstered by a record ₹7.85 lakh crore Union Budget 2026 allocation) remain structural beneficiaries. IT and Pharma offer tactical safety as the Dollar strengthens,” added Bolinjkar. He stated that investors should not mistake a geopolitical tremor for a structural collapse. “Historically, these 'black swan' events create the most attractive entry points for high-quality domestic cyclicals. Use this turbulence to filter out the noise and accumulate resilience on the dips,” he said. Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers said that if Iran chooses to mine the strait or use its stockpile of short-range missiles against tanker traffic, oil prices could spike above $100 per barrel. A prolonged closure of the strait, analysts warn, could tip the global turmoil further. Kanchan added, “Strong macroeconomic fundamentals provide long-term confidence and reinforce the case for India as a structural investment destination. However, the Iran conflict will cause short-term volatility. The market had already priced in much of the expectation of strong Q3 GDP data, and with a geopolitical shock of this magnitude hitting simultaneously, sentiment is likely to be driven by fear and oil prices.”