Indian equity markets saw a sharp gap-down opening on Monday, tracking weak cues from Asian peers, with benchmark indices falling nearly 2% in early trade.

Monday blues returned to haunt Dalal Street, with the BSE Sensex plunging as much as 1,400 points, or 1.9%, to 73,139, while the NSE Nifty dropped 418 points, or 1.8%, to 22,697. The broader market also reeled under selling pressure, with the Nifty Midcap 100 and the Nifty Smallcap 100 falling over 2% each.

The sell-off wiped out nearly ₹8.25 lakh crore of investor wealth, as the total market capitalisation of BSE-listed companies fell to ₹421 lakh crore.

All 30 Sensex stocks were in red, with Tata Steel leading the losses, falling 3.36%, followed by State Bank of India, which declined 2.94%. Financials remained under pressure, with Bajaj Finance down 2.67% and HDFC Bank slipping 2.31%.

Cement and capital goods stocks also saw notable declines, with UltraTech Cement losing 2.65% and Larsen & Toubro down 2.06%. Consumption and retail names such as Trent and Titan Company dropped 2.45% and 2.23%, respectively.

Banking and telecom heavyweights, including Axis Bank, ICICI Bank, and Bharti Airtel, fell between 1.5% and 2%. Auto major Maruti Suzuki India declined 1.84%, while IT stocks such as Infosys, TCS, and Tech Mahindra also traded lower.

On the sectoral front, the Nifty PSU Bank and Nifty Metal indices were among the worst hit, plunging 3.15% and 3.05%, respectively. Consumer-linked and rate-sensitive segments also saw significant pressure, with the Nifty Consumer Durables falling 2.55%, while the Nifty Auto and Nifty Realty declined over 2% each. Financials remained under stress, with the Nifty Financial Services down 2.24% and the Nifty Private Bank slipping 1.92%.

The sharp decline follows a warning from U.S. President Donald Trump, who asked Iran to reopen the Strait of Hormuz within 48 hours or face the destruction of its energy infrastructure. The threat has rattled global markets, given that the strategic waterway handles a significant portion of the world’s oil shipments.

With Iran vowing retaliation against energy assets across the Middle East, investors are bracing for heightened volatility, rising crude prices, and potential supply shocks - factors that could weigh further on equity markets in the near term, analysts said.

FPIs sell ₹90,152 crore worth of equities

Adding to the pressure, persistent selling by foreign portfolio investors (FPIs) also weighed on sentiment, with both the volume and intensity of outflows increasing over the past three weeks as the conflict escalated. FPIs were net sellers on all trading days in March, offloading equities worth ₹90,152 crore, according to NSDL data.

According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, the weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee, and concerns over the impact of high crude prices on India’s growth and corporate earnings have dampened FPI sentiment.

“The poor returns from India vis-à-vis other markets, both developed and emerging, over the last eighteen months are the principal reason for FPI indifference towards India. For their sustained selling strategy to change, there must be clear indications of an earnings recovery in India. In the current uncertain environment, this will take time.”

Brent crude remains high at $107 per barrel

Crude oil prices continue to hover around $107 per barrel as escalating tensions between the United States and Iran raised concerns over potential disruptions in the Strait of Hormuz, one of the world's busiest oil shipping channels. Brent crude’s June futures contract rose 1.15% to $107.61 per barrel during Asian trading hours.

The latest spike in prices follows a sharp warning from Trump, who on Saturday threatened to destroy Iran’s power infrastructure unless the Strait of Hormuz is reopened within 48 hours. In response, Iran has vowed retaliatory strikes targeting energy facilities and desalination plants across the Middle East, heightening fears of supply shocks in a critical global oil transit route.

Asian stocks fall amid Trump’s ultimatum on Iran

Stock markets across the Asia-Pacific region witnessed sharp selling pressure on Monday, tracking a steep sell-off on Wall Street on Friday after U.S. President Donald Trump issued a stark ultimatum to Iran over the Strait of Hormuz, escalating fears of a broader geopolitical conflict and potential disruption to global oil supplies.

Japan’s Nikkei 225 plunged 3.71%, while Hong Kong’s Hang Seng fell 3.19%. South Korea’s KOSPI led losses in the region, dropping 5.56%, as risk-off sentiment intensified.

Singapore’s Straits Times Index declined 1.84%, while Taiwan’s Taiwan Weighted Index slipped 2.19%. China’s Shanghai Composite was also down 2.11% in early trade, indicating broad-based weakness across the region.

On Friday, U.S. markets ended in the red as rising concerns over the escalating U.S.-Israel-Iran conflict kept investors away from riskier assets. The Dow Jones Industrial Average fell around 0.96%, while the S&P 500 and Nasdaq Composite declined 1.51% and 2.01%, respectively.