Stock market crashes 1.25% on U.S.-Iran strikes

The benchmark NSE Nifty 50 opened down 2% to 24659.25 points from the previous day’s close of 25178.6 after reports emerged of Iran shutting down the Strait of Hormuz, disrupting about a fifth of the global oil supply. The indices then gradually moved to the day’s close.

Barring Nifty Metal and Nifty Pharma all of the 21 sectoral indices on the NSE declined.

Of the 3296 stocks that traded on the index, just 651 advanced and about 2578 declined. Bharat Electrical Ltd. Hindalco. ITC, Sunpharma and ONGC gained while Indigo, L&T, Adani Ports, Maruti Suzuki and Asian Paints declined.

Nifty faced its most volatile day in eight months with the India VIX index—that measures volatility—up 23.54% to 16.9 points. This is also the fastest increase in volatility in a day since April 7, 2025, when the index increased more than 65% in one session.

Analysts say that the war and a subsequent event will create a short term volatility. As long as Nifty 50 and Sensex 30 stay above 24750 and 80,000 points, the market may stage a reversal, said Shrikant Chouhan, who heads Equity Research at Kotak Securities in a note

Stock market reaction to wars in West Asia generally transmits through oil price shocks, said Chief Investment Officer of Axis Mutual Fund Ashis Gupta in his note. “Any attempt by Iran to disrupt or close the Strait of Hormuz (SoH) represents a key upside risk to crude oil, refined products and LNG prices,” he said.

The reports on a blockade at Strait of Hormuz led to the Brent Crude Futures rallied to a nearly one year high of $79.15. “A sustained upside in prices will likely materialise only if oil flows through the Strait of Hormuz remain disrupted for an extended period, potentially 4–5 weeks as per President Trump’s campaign,” Kaynat Chainwala, AVP Commodity Research, said in a note.

“While OPEC+ has announced plans to increase output by 206,000 barrels per day starting in April to cushion potential disruptions, additional production cannot fully offset the impact of a closure or severe restriction at a chokepoint that handles one-fifth of global energy trade. If the traffic on the strait improves, price spikes may prove temporary; if it does not, the supply shock could be significantly more pronounced,” Ms. Chainwala said.

Gold too rallied after a brief period of stability 3% to $5,409.7 per ounce on the global commodities exchange COMEX. “Safe-haven demand had already been building on Friday (February 26, 2026) after China and the United States issued evacuation advisories urging their citizens to leave Iran and Israel, reflecting growing concern over the expanding conflict…. A decisive breakout to new highs would likely require a major escalation, for instance, a confirmed large-scale Iranian attack on a U.S. aircraft carrier such as the USS Abraham Lincoln, which could provoke substantial U.S. retaliation and ignite another wave of aggressive safe-haven buying,” said Ms. Chainwala in the note.

Analysts across brokerages and Asset Management Companies (AMCs) maintain that external war-led volatility in the market will not have any effect in the long-term investment trend.

“While periods of conflict can lead to short-term volatility, experience suggests that making portfolio decisions purely in response to these has often proven less effective than maintaining a long-term investment approach. Investors who exited equities during earlier conflict-driven sell-offs frequently missed the recoveries that followed, sometimes within a relatively short span. The takeaway from these episodes is not to ignore risk, but to approach it with discipline and perspective,” said Mr. Gupta, advising that investors avoid any panic selling.