Equity markets across the globe saw a broad-based sell-off on Monday, March 2, 2026 after the Iran war escalated over the weekend. So did India’s equity markets. Openieng with a huge gap-down, both the benchmark indices – Sensex and Nifty 50 – ended the session deep in the red. The BSE Sensex started with a gap-down of 2,743.46 points, or 3.37 per cent at 78,543.73. However, after a volatile session, the 30-share benchmark index managed to pare some losses and closed at 80,238.85, down 1,048.34 points, or 1.29 per cent. Similarly, the NSE Nifty 50 plunged as much as 575.15 points, or 2.28 per cent, to hit an intraday low at 24,603.50. Mirroring Sensex, the 50-share benchmark index, too, recovered losses partially and settled at 24,865.70, down 312.95 points, or 1.24 per cent.
The sell-off was broad-based as the Nifty Midcap 100 closed lower by 1.58 per cent and the Nifty Smallcap 100 ended 1.75 per cent in the red. Nifty 500, which represents more than 92 per cent of the free-float market capitalisation of all NSE-listed stocks, also ended 1.43 per cent down.
The weakness was visible across sectors. The auto, oil & gas and consumer durables indices declined over 2 per cent each. Financial counters, which carry significant weight on the benchmarks, also came under pressure, with the PSU bank and financial services indices ending more than 1 per cent lower. Realty stocks slipped amid cautious sentiment, while IT shares too closed in the red. Defensives, too, were under pressure, as FMCG index closed 0.76 per cent lower, while pharma and healthcare settled near flat levels.
Iran War: What Happened
In one of the most dramatic developments in West Asia’s geopolitics in decades, the United States (US) and Israel on February 28 launched a coordinated military strikes across Iran targeting military installations, nuclear sites, and key compounds of Iranian leaders.
According to reports, the offensive, dubbed as Operation Epic Fury by the United States and Operation Lion’s Roar by Israel, struck hundreds of targets across Iran. The sheer scale of the action makes it one of the largest military operations seen in the region in recent years.
The coordinated strikes reportedly killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, who had been in power since 1989. Iranian state media also confirmed that Khamenei died in a strike targeting his compound in Tehran.
Iran responded with retaliatory attacks on US military bases across several West Asian countries, raising fears of a wider regional conflict. The US has indicated that the attacks may continue. “We are going to destroy their missiles and raze their missile industry to the ground. It will be totally, again, obliterated,” US President Donald Trump said in a video address posted on his Truth Social platform from his Florida home in West Palm Beach, Florida.
Why Did US And Israel Attack Iran Now
For years, the US and Israel have maintained that Iran’s nuclear programme pose a direct threat to their national security. Iran, however, has consistently denied that it is enriching uranium for building nuclear weapons, and insist that its nuclear activities are meant for peaceful purposes such as generating electricity and scientific research.
In the weeks ahead of February 28, the US and Iran were engaged in negotiations, and Oman was acting as a mediator, to find a way forward on Iran’s nuclear programme. Reports at the time suggested that Iran had indicated a willingness to halt uranium enrichment and allow full inspections by the United Nations, a development that had briefly raised hopes of a diplomatic breakthrough. However, according to a report by The Washington Post, a senior US official said the that there were “indicators” that Iran was considering “pre-emptive” strikes US targets overseas. The official attributed this assessment in President Trump’s decision to order military strikes.
What The Iran War Means For Indian Markets And Your Portfolio
During times of conflict, it is the nature of markets to react in panic, as uncertainty rises and investors rush to cut risk.
Devina Mehra, chairperson, managing director and founder of First Global, urged investors to look at history before reacting. She said, “We looked back over the past 50 years and studied every major geopolitical event — from the Gulf Wars, the war in Afghanistan, the 26/11 Mumbai terror attacks, and US-led bombing in Libya. What we found was that in every single case, stock markets around the world had largely forgotten about the event within six months to a year. Yes, there is turmoil around such events, but after six months to a year, the only markets that remain impacted are those directly involved in the conflict. Normally, conflicts last for a long time; none of them get over in a week. So, the broader market impact tends to be limited. That’s what we saw during the Russia–Ukraine conflict as well four years ago. There is no need to panic on the markets front.”
History shows that panic-driven corrections in markets usually do not last very long. But right now, the bigger concern for India is rising crude oil prices.
India depends heavily on imported oil. The country imports around 88 per cent of its oil requirement, as per the latest data from the Petroleum Planning & Analysis Cell (PPAC). This high dependence makes India vulnerable whenever global oil prices spike due to geopolitical tensions or supply disruptions.
Any disruption in the Strait of Hormuz, a major route for oil shipments, can push crude prices up. Around one-fifth of the world’s oil passes through this channel, so any trouble there has a big impact on global oil supply. When the crude oil prices rise, it leads to increase in transportation costs, and ultimately leads to higher inflation in every segment. To deal with this inflation, central banks across the world, including the Reserve Bank of India (RBI), typically increase the interest rates and this puts a negative impact on the global economic growth, raising concerns over global recession.
