Iran War Impact On Stock Market: How Will Sensex, Nifty React On Monday? Analysts Weight In

Indian stock markets are likely to open on a weak note when trading resumes on Monday, March 2, 2026, as rising tensions in the Middle East are expected to hurt investor sentiment, analysts say. The BSE Sensex and NSE Nifty 50 will be in focus after the conflict escalated following the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei.

Military action in and around the Strait of Hormuz disrupted key oil shipments, pushing crude oil prices higher and increasing volatility in global financial markets.

The West Texas Intermediate (WTI) crude oil futures jumped 2.78 per cent to $67.02 per barrel on February 28. Similarly, the Brent crude oil futures surged 2.45 per cent to $72.48 per barrel.

Iran War Impact On India

For India, which relies heavily on oil imports, market participants are concerned that higher energy prices could push inflation higher, increase input costs for companies and put pressure on the broader economy.

VK Vijayakumar, chief investment strategist at Geojit Investments, said the recent surge in crude oil prices could hurt India’s external balances if it persists, as India imports nearly 85 per cent of its oil needs.

He added that OPEC Plus is expected to increase production in an attempt to stabilise oil prices. However, he cautioned that if the Strait of Hormuz closes, it could trigger a further spike in crude. He also said that while Trump may seek to reopen the route through force, such a move would require boots on the ground and could further escalate tensions.

The Strait of Hormuz is one of the world’s most critical oil transit routes. Any disruption in this corridor immediately raises concerns over supply shortages.

“Elevated import costs are likely to widen the current account deficit and  further strain the fiscal deficit through increased subsidy obligations,” explained Manoranjan Sharma, chief economist at Infomerics Ratings.

Iran War Impact On the Indian Stock Market

Benchmark indices are likely to open lower, and volatility is expected to remain high, said Manoranjan Sharma, chief economist at Infomerics Ratings.

He said a short-term correction of around 1–1.5 per cent cannot be ruled out. According to Sharma, automobiles, financials and FMCG stocks are likely to face pressure. On the other hand, IT and select export-oriented companies may see some support due to global risk aversion and a stronger US dollar, he said.

Sharma added that sectors that are heavily dependent on fuel, such as aviation, logistics, paints and chemicals, could see margins shrink as input costs rise, while upstream oil producers may gain from higher crude prices.

He also warned that foreign portfolio investors (FPIs) could decrease their exposure from Indian equities in the near term, which may put pressure on the rupee. A weaker rupee would make imports costlier and add to inflation concerns. At the same time, rising freight and insurance costs due to geopolitical tensions could increase the cost of trade and squeeze exporters’ margins. However, he said India’s diversified trade relationships across regions may help limit the overall damage.

If the conflict drags on, he warned that the government’s fiscal position could come under strain due to higher subsidy bills, weaker disinvestment prospects and the need for additional social spending to support the economy.

“The near-term impact will be negative,” Vijaykumar said. The medium-term impact on the market, he said, will depend on how long the conflict lasts. “After crippling Iran, the US and Israel may make a strategic withdrawal. The market will react very negatively. In a weak market, upstream oil companies and defence stocks will do well.”