Stock market investors have suffered huge losses since the conflict in West Asia began late last month. During this period, BSE’s benchmark Sensex fell by more than 11 percent. There is a reason for this also. Investors moved away from riskier assets due to the war’s impact on crude oil prices and markets around the world. The markets were also hit by the outflow of foreign funds from domestic equities. Since the conflict in West Asia began on February 28, the BSE benchmark has fallen 9,339.64 points or 11.48 per cent. Due to this huge fall in equity, the market capitalization of BSE listed companies declined by Rs 51,09,498.82 crore to Rs 4,12,41,172.45 crore (4.36 trillion USD) this month.
Market 16 percent below peak
Ponmudi R, CEO, Enrich Money, said the current downward trend is mostly due to external factors and not due to deteriorating market fundamentals. Rising crude oil prices, geopolitical risks in the Middle East and continuous selling by FIIs have created a risk-averse environment in the market. From its all-time high of 86,159.02, the BSE benchmark index is down 14,211.47 points or 16.49 per cent. Brent crude, the global benchmark of crude oil, rose 4.15 percent to USD 117.46 per barrel. Foreign investors pulled out more than Rs 1 lakh crore from domestic equities in March, the largest monthly outflow ever, due to rising tensions in West Asia and a weak rupee.
Biggest decline after Covid
Pabitro Mukherjee, Associate Vice President Technical Research, Bajaj Broking, said the four weeks since the conflict began have seen the sharpest wave of risk aversion since the COVID-19 pandemic caused global market turmoil in 2020. During this period, FIIs have been the biggest reason behind the market weakness, and they have maintained continuous selling pressure. He further said that foreign institutional investors (FIIs) sold extensively in Indian equities in March 2026, one of the largest monthly outflows of capital in recent history.
Markets fell 2 percent on Monday
Mukherjee said that the main reason for this large-scale withdrawal is the increasing geopolitical tensions in West Asia, which has increased global uncertainty and risk aversion. Equity benchmark indices Sensex and Nifty closed with losses of more than 2 per cent in the last trading session of the 2025-26 financial year on Monday. Siddharth Khemka, Research Head, Wealth Management at Motilal Oswal Financial Services Ltd. said rising tensions in West Asia continued to weigh heavily on markets as the ongoing US-Israel conflict with Iran entered its fifth week and spread across the region.