Indian markets were under pressure in Monday's session as escalating tensions in the Middle East have triggered a broad risk‑off move. Markets ended sharply lower, with the Nifty 50 closing down more than 2% and slipping below the 22,400 mark, marking its second consecutive session of losses. Heavyweight stocks weighed on the benchmark, with Bajaj Finance and SBI emerging as the top losers, both declining over 3.5%.
March also marks the worst month for the equities since March 2020, with a fall of over 10% for the Nifty.
Today also marks the monthly and weekly expiry for Nifty contracts, as Tuesday is a market holiday. India VIX, the volatility guage, is also up 4.31% at 27.97.
Sectorally, all Nifty sectoral indices ended in the red, reflecting widespread risk aversion. The Nifty PSU Bank index was the worst-performing sector, sliding over 4.5% and extending its decline for a second straight day, with Union Bank of India and Punjab & Sind Bank falling more than 5.5% each.
Other key indices including Nifty Bank, Realty, Financial Services, Auto, Oil & Gas, Media, FMCG, Metal, Energy, IT, and Pharma also ended lower for the second consecutive session, underscoring the broad-based nature of the sell-off.
The broader market underperformed the frontline indices, as the Nifty SmallCap 250 fell more than 2%, led by steep losses in Authum Investment and Infra and Valor Estate, with Authum plunging over 11.5%. The Nifty MidCap 150 also saw sharp selling pressure, ending 2.5% lower, dragged down by stocks such as Apar Industries and Union Bank of India, both of which dropped over 6.5%.
Here are three key reasons dragging the markets on Monday.
Escalating Middle East Tensions
Monday marks the 31st day of the US, Israel-Iran conflict. US President Donald Trump said on Monday he wants to "take the oil" in Iran and floated the idea of capturing the Iranian export hub on Kharg Island as the war entered its second month.
In an interview to UK daily The Financial Times, Trump compared the potential move with the US approach in Venezuela, where he noted Washington's intention to control the oil industry "indefinitely" following the abduction of President Nicolas Maduro in January.
Get the latest updates on US, Israel-Iran war here.
Brent crude jumped over 3% in early trading to cross $116 per barrel, putting it on track for one of its strongest monthly gains on record. US benchmark West Texas Intermediate also climbed past the $100 mark. The rally reflects growing anxiety that supply disruptions could intensify if the conflict spreads further across key oil-producing and transit regions.
FII Selling Continues
Foreign investors have withdrawn Rs 1.14 lakh crore (around $12.3 billion) from Indian equities in March, marking the largest monthly outflow on record. The sharp exodus has been driven by escalating tensions in the Middle East, sustained pressure on the rupee, and worries that persistently high crude oil prices could weigh on India's economic growth.
With one trading session still left in March, analysts caution that the withdrawal figure could rise further. The previous peak in monthly foreign selling was recorded in October 2024, when outflows totalled Rs 94,017 crore. Including the latest pullback, cumulative foreign portfolio investor (FPI) outflows have reached Rs 1.27 lakh crore so far in 2026, according to data from the National Securities Depository Ltd. (NSDL).
ALSO READ: Foreign Investors Dump Record Rs 1.14 Lakh Crore In March On Middle East Conflict
Weak Global Cues
Asia-Pacific markets also fell on Monday as the war in the Middle East entered its fifth week. Japan's Nikkei 225 was down 4.65%, while South Korea's Kospi fell 3.51%. Hong Kong's Hang Seng declined 1.84%, Australia's ASX 200 dropped 1.18%, and Shanghai slipped 0.67%.
Get the latest updates on the stock market here.
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