Indian benchmark indices witnessed a sharp sell-off at the opening bell on Monday, tracking weak global cues and persistent risk-off sentiment among investors. With the conflict in West Asia entering its fifth week and Brent crude surging to $116 per barrel, concerns over further escalation have intensified, souring investors’ appetite for riskier assets. The situation has worsened with the Houthis joining the conflict, while the United States has deployed additional troops to reinforce its military presence.

Weighed down by these developments, the BSE Sensex tumbled 1,192 points, or 1.61%, to 72,391.98 in early trade, while the Nifty 50 declined 349 points, or 1.53%, to 22,470.

The weakness was mirrored on the broader market as well, with the Nifty Midcap 100 and the Nifty Smallcap 100 indices, falling 1.7% and 1.8%, respectively in early trade.

The sell-off wiped out nearly ₹4.34 lakh crore of investor wealth, as the total market capitalisation of BSE-listed companies fell to ₹417.27 lakh crore.

India’s volatility index, India VIX, surged as much as 7.87% in the early trade to hit a 52-week high of 28.91, indicating heightened uncertainty over the escalating Israeli attacks on Iran, as the conflict entered its fifth week since the beginning on February 27.

Banking, IT stocks lead fall

The breadth of the market remained firmly negative, with a majority of Sensex constituents trading in the red. Financial pack led the decline, with Axis Bank shares plunged nearly 4%, emerging as the top loser, followed by Kotak Mahindra Bank, which dropped over 3%. Heavyweights including ICICI Bank, State Bank of India and HDFC Bank also declined between 1.7% and 2%, amplifying the pressure on the headline indices.

Sectorally, banking stocks were the worst hit, with the Nifty Private Bank falling 2.79% and the Nifty PSU Bank declining 2.15%. The Nifty Financial Services 25/50 index also dropped over 2%, reflecting broad-based selling across lenders and NBFCs.

IT stocks also reeled under selling pressure, weighed down by global uncertainty and currency concerns. Index majors such as Infosys, Tata Consultancy Services, HCLTech and Tech Mahindra traded lower, falling up to nearly 1%, with the Nifty IT index down 0.78%.

Selling was also visible across rate-sensitive and consumption plays. The Nifty Auto index fell 1.48%, while stocks like Maruti Suzuki India, Mahindra & Mahindra, Bajaj Finance and Asian Paints declined between 0.8% and 1.7%. The Nifty Realty index also slipped 1.35%, indicating weakness in cyclical segments.

Defensive pockets were not spared either. The Nifty FMCG index fell 1%, while the Nifty Pharma and Nifty Healthcare Index declined around 1–1.5%. Stocks such as Hindustan Unilever and ITC also traded lower, reflecting the broad-based nature of the sell-off.

Among other laggards, Larsen & Toubro, UltraTech Cement, Titan Company and Bharti Airtel fell up to 1.8%, further weighing on sentiment.

On the flip side, Bharat Electronics gained over 1%, standing out as the top gainer on the Sensex. Reliance Industries and Power Grid Corporation of India also traded marginally higher.Valuations appear fair after the recent correction

Valuations appear fair after the recent correction

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the “Goldilocks” macroeconomic scenario that India enjoyed prior to the war has largely dissipated.

“Instead of a backdrop of high GDP growth, low inflation, moderate fiscal and current account deficits, and expectations of strong corporate earnings growth in FY27, we are now looking at a scenario of slower GDP growth, higher inflation, wider fiscal and current account deficits, and weaker earnings growth,” he noted.

He added that the market has largely priced in these negatives, as reflected in the decline in the Nifty’s trailing price-to-earnings (P/E) ratio to around 19.9 times. “While valuations appear fair, they are not yet cheap. However, certain segments, such as financials, are becoming attractively valued,” he said.

Ponmudi R, CEO of Enrich Money, said that even if geopolitical tensions ease in the near term, the economic impact is likely to persist.

“Persistently high crude prices and rising input costs are expected to sustain inflationary pressures, which could compress corporate margins and dampen consumption, thereby weighing on the earnings outlook in the coming quarters,” he said.

He added that the current situation appears to be more than a short-term disruption and could have a broader cyclical impact on the economy.

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