Stock Market Plummets Amid West Asia Conflict and Rising Energy Costs

Market Decline

The stock market experienced a significant downturn on Monday, driven by escalating tensions in West Asia and increasing energy prices.

As of 10:30 AM, the benchmark BSE Sensex had dropped over 1,700 points, reflecting a decline of 2.3%. Meanwhile, the Nifty index fell by 2.4%, equating to a loss of more than 560 points.

This downturn is projected to result in a loss exceeding Rs 11 lakh crore for investors, as reported by a financial news outlet.

The decline in stock prices began on March 2, coinciding with the onset of the conflict.

In the last three weeks, foreign investors have pulled out approximately $9.5 billion from the Indian stock market, according to reports.

The India VIX index, which gauges market volatility, surged by 15.3% on Monday.

Other major Asian stock markets also faced declines on Monday. By 10:30 AM Indian time, Hong Kong’s Hang Seng index was down 3.2%, South Korea’s Kospi dropped 5.8%, Japan’s Nikkei fell by 3.5%, and China’s Shanghai Composite decreased by 2.3%.

Rupee Weakens

Rupee slides

The Indian rupee hit a record low of 93.9 against the US dollar on Monday, amid ongoing foreign fund outflows and declining stock values. The rupee depreciated by 41 paise since the previous Friday's close.

Other major Asian currencies also experienced declines ranging from 0.1% to 0.8%, as the conflict continues into its fourth week without signs of easing supply disruptions.

On the same day, the South Korean won fell to its lowest value against the US dollar in 17 years, reaching 1,510 won per dollar.

Surging Energy Prices

Global energy prices

Since the conflict began, global oil prices have surged by over 50%.

On Monday, Brent crude was trading at nearly $113 per barrel, up from $78 per barrel on February 27, just before the conflict started. Iran has effectively restricted access to the Strait of Hormuz, a crucial maritime route for international shipping, since the conflict began, affecting about 20% of the world's oil supply.

Meanwhile, US WTI crude was priced at nearly $100 per barrel.

The head of the International Energy Agency warned that the world could face its most severe energy crisis in decades due to the ongoing conflict, stating that the loss of 11 million barrels of oil per day exceeds the combined losses from the two major oil crises of the 1970s.

The agency is in discussions with governments in Asia and Europe regarding the potential release of additional oil reserves if necessary.