Indian Stock Market Reacts To Middle East War On March 2: Sensex, Nifty Crash On Geopolitical Risks; 5 Factors

The Indian stock market crumbled like dominos during the March 2nd trading session as tensions in the Middle East turned fatal. Sensex and Nifty crashed by 2% to 3.5% at the opening bell, with all indices trading in deep red. Bharat Electronics (BEL) emerged as top performer as investors become optimistic in defence stocks due to geopolitical risks. Here are 5 market movers that is impacting sentiments in equities.

Sensex, Nifty Today:

Sensex and Nifty 50 crashed steeply on March 2. The 30-scrip index nosedived by 2,743.46 points or 3.4%, to hit an intraday low of 78,543.73, while Nifty 50 plunged by 533.55 points to hit an intraday low of 24,948.45.

In the pre-open, Sensex crashed by 2743.46 points or 3.4% and Nifty 50 nosedived by 519.40 points or 2.06%.

Currently, Sensex traded around 80,141 and Nifty 50 performed around 24,893.

Stocks like Indigo, Eternal, L&T, Adani Ports, Asian Paints, Maruti Suzuki and Ultratech Cements are top losers with 2% to 5% decline. Heavyweight Reliance Industries also nosedived by 2%, which only intensified the selling pressure.

All indices are in deep red. Nifty Midcap and Smallcap indexes have plunged by 2% each. Nifty IT, Nifty Consumer Durables, Nifty Oil & Gas, Nifty Chemicals, Nifty Realty, Nifty PSU Bank, Nifty Media and Nifty Auto tumbled by 1.5% to 2.5%.

1. Rupee Weakens:

In the early hours of March 2nd trading session, Indian rupee weakened to hit its lowest level in a month as global crude oil prices skyrockets. Rupee slipped to hit around 91.2 per dollar.

2. Crude Oil Prices:

US WTI crude futures climbed by a whopping 10% to trade around $75 per barrel. This marks its highest level in eight months.

Meanwhile, Brent crude futures outperformed with 12% upside and traded around $78 per barrel.

Oil prices spiked due to unprecedented coordinated strikes by US and Israel on Iran which further stretched to Lebanon. Meanwhile, Iran and its proxy Hezbollah has reacted with their own sets of attacks, especially at the sea and Israel borders.

Markets are observing the situation at the Strait of Hormuz. As per Ponmudi R, CEO of Enrich Money, crude oil prices rose amidst the escalating hostilities, while shipping activity through Iranian waters and the Strait of Hormuz has reportedly slowed due to heightened security risks.

3. Dollar Strengthens, Bond Yields Mild Gains:

Dollar index surged by 0.5% to hit 98 level against a basket of currencies as investors fear a surge in crude oil prices could hit inflations of countries and that could lead to further hawkish stance from US Federal Reserve, which is a key booster for dollar and bond yields.

At the time of writing, US 10-year treasury bond yield traded around 3.979%, which is marginally up from the previous sessions. This comes after the yield had dropped 4% due to stagflation risk on Friday last week.

4. Asian markets:

Asian stocks witnessed a bearish tone in the Monday's trading session. Nikkei 225 has plunged by 1.5%, while Hang Seng has nosedived by 2%. Also, Australia's S&P/ASX 200 index is down by 0.3% and Shanghai traded in narrow range. Gift Nifty futures also slipped by nearly 333 points.

5. Middle East War:

The war between the US and Israel versus Iran has kaboomed in the Middle East. Major commanding leaders of the Islamic Republic country have been wiped out, with supreme leader Ali Khamenei being the most prominent death during the weekend.

The Strait of Hormuz, one of the world's most strategically important choke points for global oil and gas trade, is back in the limelight.

Meanwhile, six other countries are pulled into the war as Iran bombards Israel, Jordan, Qatar, Kuwait, Oman, Bahrain and the UAE. Amidst the tensions, the United Arab Emirates (UAE) have declared stock market holiday for two days.

The war further extended its territorial impact with Hezbollah joining the chaos. As per latest reports, Hezbollah launched a series of missile attacks, mainly targeted towards Israel borders. This resulted in the IDF firing at Lebanon.

US-Israel-War Impact On Sensex, Nifty?

For India, Ponmudi said, the confluence of elevated crude prices, shipping disruptions and rising war-risk premiums poses a multi-layered challenge. Higher energy costs threaten to inflate the import bill, widen the trade deficit and renew pressure on the rupee. At the same time, delays along key maritime routes could lift landed input costs and disrupt supply chains across import-dependent sectors.

Key sectors that could be impacted are -- industries reliant on overseas raw materials-such as chemicals, electronics, auto components and broader manufacturing-may face margin compression and operational bottlenecks. Logistics, aviation, paints, tyres and export-oriented businesses are also vulnerable to higher freight and insurance expenses, compounding near-term earnings uncertainty.

Furthermore, Ponmudi said, although steady domestic institutional inflows continue to cushion persistent foreign outflows, the prevailing geopolitical overhang and trade-flow disruptions are likely to keep markets range-bound with a modest downside bias.

Hence, trading activity may remain volatile and directionally constrained until geopolitical tensions ease, shipping routes stabilize, or clearer macroeconomic catalysts restore investor confidence.

To investors, Hitesh Tailor, Research Analyst at Choice Broking said, amid global uncertainties and heightened volatility, traders are advised to remain disciplined and highly selective, prioritizing fundamentally strong stocks during corrective phases. Fresh long positions should be initiated only after a decisive and sustained breakout above the 25,800 level on the Nifty, which would indicate improving sentiment and confirm the formation of a stronger bullish structure.

Sensex, Nifty Technical Outlook:

As per Vaishali Parekh, Vice President - Technical Research at PL Capital Group, the following are the technical indicators for Sensex and Nifty in coming sessions:

Nifty 50: The index is now precariously placed, with the next major and important support positioned near the 24500 zone and would need to sustain the near-term psychological base of the 25000 level in the coming sessions, with upside resistance maintained near the 50EMA zone at the 25600 level.

Sensex: The index would have the near-term crucial support at the levels in the range of the 80000 - 80500 zone, which needs to be sustained, below which the bias can turn weak with sentiment turning into cautious mode.