Indian Stocks Plunge: Middle East Tensions Send Sensex Crashing Over 1,300 Points

GG News Bureau
Mumbai, 13th June: India’s stock market benchmarks, the Sensex and the Nifty 50, suffered sharp losses today, mirroring a downturn across major Asian markets like Japan’s Nikkei and South Korea’s Kospi. Escalating tensions between Israel and Iran rattled investors, triggering a significant selloff.

The Sensex opened sharply lower at 80,427.81, down from its previous close of 81,691.98. It then plummeted over 1,300 points (1.6%) to an intraday low of 80,354.59. The Nifty 50 also started the day at 24,473, crashing 1.7% to its intraday low.

Broader markets felt the squeeze too, with the BSE Midcap and Smallcap indices tumbling up to 1.5%. By 10 AM, investors were poorer by approximately ₹7 lakh crore as the overall market capitalization of BSE-listed firms plunged to nearly ₹442.5 lakh crore from ₹449.6 lakh crore in the previous session.

Why the Market is Tanking: 5 Key Reasons

1. Israel Strikes Iran, Hits Sentiment: The immediate trigger was news of Israel’s strikes on Iran, targeting key nuclear facilities, missile factories, and military sites. Israeli Prime Minister Benjamin Netanyahu stated the operation hit the “core of Iran’s nuclear enrichment programme.” This escalation fuels fears of a prolonged Middle East conflict, with Netanyahu vowing the offensive will persist “for as many days as necessary.” “The economic consequences of this Israeli strike can be profound if the attack and counterattack by Iran linger long,” noted VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. This new conflict, alongside ongoing Russia-Ukraine tensions, makes geopolitical instability a top concern for investors.
2. Crude Oil Prices Soar 10%: WTI Crude and Brent Crude prices surged over 10% after Israel’s strike, driven by worries about supply disruptions from the Middle East. This rise is particularly alarming for India, a major crude oil importer. A sharp jump in oil prices could strain the nation’s finances and reignite inflationary pressures that had recently started to ease.
3. Rush to Safe-Haven Assets: Amid heightened geopolitical risks, investors are ditching riskier equities for safe-haven assets. This includes a scramble for US bonds, the US dollar, and gold. Gold prices in the domestic futures market climbed 2%, while the US dollar gained over 0.30%. US bonds saw an uptick, which typically pushes bond yields down.
4. Rupee Breaches 86 Per Dollar: The Indian rupee weakened significantly, opening at 86.14 per dollar (down 54 paise from Thursday’s close of 85.60). A weaker rupee can spark foreign capital outflow, boost import costs, raise inflation risks, and harm corporate profits.
5. Lingering Tariff Uncertainty: While the Israel-Iran conflict is the immediate cause, persistent uncertainty surrounding US President Donald Trump’s tariff policies continues to weigh on market sentiment. Although Trump announced a trade agreement between the US and China (pending final approval), experts suggest the market is underwhelmed, having hoped for a more sweeping deal between the world’s two largest economies.