Indian Markets Slide as Iran Tensions Weigh Heavy on Energy, Oil & Gas Stocks

Indian equity markets traded sharply lower on Monday amid escalating geopolitical tensions in the Middle East, with broad-based weakness visible across benchmark and sectoral indices on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

The Nifty 50 was trading at 24,850, down 328.05 points or 1.3%, while the broader Nifty 500 fell 329 points or 1.42% to 22,837.45 at the end of trading, indicating widespread decline.

On the BSE, the BSE 100 slipped 361 points or 1.36% to 26,085.48, reflecting weakness among large-cap stocks.

Energy, Oil & Gas Under Pressure

Energy-linked indices led the declines during the session.

The Nifty Oil & Gas dropped 263.60 points or 2.15% to 12,001.3, while the BSE Oil & Gas fell 635.72 points or 2.15% to 28,959.94.

Similarly, the BSE Energy declined 253 points or 2.06% to 12,021.43, and the Nifty Energy shed 591.80 points or 1.6% to 36,453.40.

The weakness in the energy and oil & gas sectors reflects heightened uncertainty among the oil-producing nations in the Middle East, as the US-Israeli offensive against Iran threatens to spill over to the entire Middle East, as Iran targets US assets in the region.

IT Also Trades Lower

The Nifty IT was down 330.90 points or 1.08% at 30,272.95, indicating selling pressure extending beyond commodity-linked segments.

Broad-Based Market Weakness

The sharper decline in the broader Nifty 500 relative to the benchmark Nifty 50 suggests participation across market capitalisations. Sectoral data from both exchanges indicates that selling was not confined to a single pocket but spread across energy, technology, and other large-cap segments.

In a note titled “Asia Insights – Iran, oil and Asia,” analysts at the financial services group Nomura said rising oil prices represent a “negative terms-of-trade shock for Asia,” with the higher oil import bill being “the most potent transmission channel.”

The brokerage noted that on average, “every 10% rise in the price of oil worsens Asia’s current account balance by ~about 0.3% of GDP,” identifying Thailand, India, and South Korea among the most vulnerable due to high import dependence.

While higher crude prices could weigh on equities if sustained, Nomura said, “a sustained move higher in oil prices would clearly be negative for stocks, including Asian stocks,” though any impact could prove short-lived if the conflict de-escalates quickly.

VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, told AIM, "The near-term impact will be negative. Crude has spiked, and if the crude price remains high for an extended period of time, our balance of trade and balance of payments will be impacted since we import around 85% of our oil requirements.”

He observed that OPEC Plus will scale up production and try to stabilise prices.

“If the Strait of Hormuz is closed (there are unconfirmed reports of this), the crude price can spike further. [US President Donald] Trump may forcefully reopen this. But that requires boots on the ground, which will escalate tensions further,” he said, adding that the medium-term impact on the market will depend on how long the conflict lasts,” he added.

He remarked that in a weak market, upstream oil companies and defence stocks will do well. 

Upstream and oilfield services stocks bucked the broader market weakness, with Oil and Natural Gas Corporation  Limited (ONGC) rising 0.63% to ₹281.45, Hindustan Oil Exploration Company Limited gaining 4.53% to ₹136.79, Jindal Drilling and Industries Limited surging 16.33% to ₹518, and Deep Industries Limited advancing 5.62% to ₹366.60 on the NSE.