What’s Causing the Stock Market Plunge? Insights on Recent Trends

The stock market faced a significant downturn on Monday, with both Sensex and Nifty dropping over 1% due to rising crude oil prices and geopolitical tensions in West Asia. The assassination of Iran's Supreme Leader has escalated concerns, leading to heavy foreign fund outflows. While some stocks gained, the overall market sentiment remains shaky. Investors are advised to stay informed as the situation develops, especially with markets closing for Holi. Read on for a detailed analysis of the current market trends.

By Narendra Chaudhary Mar 2, 2026, 16:30 IST

Market Overview

Mumbai: The benchmark stock indices, Sensex and Nifty, experienced a significant decline of over 1% on Monday, primarily due to a sharp increase in crude oil prices amidst rising tensions in West Asia.

Investor sentiment was further dampened by negative trends in global markets and substantial outflows of foreign funds.

The BSE Sensex, which comprises 30 stocks, plummeted by 2,743.46 points or 3.37% to reach 78,543.73 during early trading. It eventually closed at 80,238.85, down by 1,048.34 points or 1.29%.

Similarly, the NSE Nifty, which includes 50 stocks, fell by 575.15 points or 2.28% to 24,603.50 in intra-day trading, later settling at 24,865.70, down 312.95 points or 1.24%.

Among the major losers in the Sensex pack were InterGlobe Aviation, Larsen & Toubro, Adani Ports, Maruti, Asian Paints, and Bajaj Finserv.

In contrast, Bharat Electronics, Sun Pharma, and ITC were the only stocks that gained.

Brent crude oil, the global benchmark, surged by 8.34% to USD 78.95 per barrel.

The geopolitical landscape shifted dramatically following the death of Iran's Supreme Leader Ayatollah Ali Khamenei, confirmed by Iranian state media after a US-Israeli airstrike in Tehran on Saturday.

In retaliation, Iran launched missile strikes against Israel and neighboring Arab nations.

Asian markets reflected this turmoil, with Japan's Nikkei 225 dropping over 1% and Hong Kong's Hang Seng index falling by more than 2%, while Shanghai's SSE Composite index managed to close positively. South Korea's markets were closed for a holiday.

European markets also opened sharply lower, and the US market had a downturn on Friday.

Vinod Nair, Head of Research at Geojit Investments Ltd, noted, "The escalating geopolitical tensions in the Middle East have unsettled global markets, raising concerns about the potential for prolonged instability following the assassination of Iran's supreme leader."

He added, "The rise in crude oil prices and a weakening Indian Rupee indicate worries over possible oil supply disruptions, which could heighten inflationary pressures in India and affect fiscal stability, particularly for sectors reliant on energy and chemicals."

The India VIX has increased, indicating heightened uncertainty and risk aversion among investors.

Data from exchanges revealed that Foreign Institutional Investors (FIIs) sold equities worth Rs 7,536.36 crore on Friday, while Domestic Institutional Investors (DIIs) purchased stocks worth Rs 12,292.81 crore.

On the previous Friday, the Sensex had already dropped by 961.42 points or 1.17%, closing at 81,287.19, while the Nifty fell by 317.90 points or 1.25% to end at 25,178.65.

Equity markets will be closed on Tuesday in observance of Holi.