Indian equity markets slumped to their lowest levels in about 10 months on Monday after a sharp spike in crude oil prices rattled investors, raising concerns that higher inflation could dent corporate earnings and economic growth.

The Sensex fell as much as 3.2 per cent during the day to hit an intraday low of 76,425 before recovering partially to close at 77,566, down 1,353 points or 1.7 per cent, the lowest closing level since April 2025. The Nifty ended at 24,028, down 422 points or 1.7 per cent, its lowest close since May 2025.

Monday’s fall was the steepest for both indices since the Union Budget. Since the start of the conflict in West Asia, the benchmark indices have declined about 4.6 per cent.

The total market capitalisation of BSE-listed companies declined by ₹8.5 trillion, falling to ₹441 trillion.

Crude oil prices surged as much as 26 per cent intraday, touching $116.8 per barrel, after major oil producers cut supplies and fears of shipping disruptions mounted amid the escalating US–Israel conflict with Iran. The Strait of Hormuz, through which nearly a fifth of the world’s oil supply passes, has effectively been shut.

Investors were also unsettled by the appointment of Mojtaba Khamenei as Iran’s Supreme Leader, signalling that Tehran’s regime may be unlikely to back down quickly from the conflict with the US and Israel.

Brent crude crossed $100 per barrel for the first time since August 2022, before easing to around $103 after reports of a coordinated release of strategic oil reserves helped temper prices.

Higher crude prices are particularly concerning for India, which imports the bulk of its oil requirements. Rising oil costs tend to stoke inflation, widen the current account deficit and weigh on economic growth.

The Indian rupee also weakened sharply, touching a record low of 92.3 against the US dollar.

The spike in geopolitical tensions comes at a time when Indian equities are already grappling with uncertainty around global growth and disruptions from artificial intelligence.

“Unlike the Russia–Ukraine war, this is not a skirmish between two countries. Half a dozen other countries have been bombed and the Strait of Hormuz — a key supply choke point — has dramatically affected oil prices. Moreover, the US is directly involved in this conflict, and it does not appear that the parties will come to the negotiating table anytime soon,” said U R Bhat, co-founder of Alphaniti Fintech.

Bhat said sustained high oil prices would pose a significant challenge for India.

“If oil prices rise further, even discounted Russian crude will not fully cushion the impact. It will widen the current account deficit. Exports could also be hit because of disruptions to shipping routes. So India could face a double whammy of rising imports and weaker exports,” he said.

Market participants said the near-term trajectory of equities will depend largely on how the conflict in West Asia evolves.

“The next immediate support for the Nifty is placed around 23,500, followed by the 23,200 zone. On the upside, any recovery towards the 24,000–24,300 band is likely to face stiff resistance. Considering the prevailing uncertainty and the scheduled weekly expiry, we maintain a cautious stance and recommend strict risk management until stability returns,” said Ajit Mishra, SVP–Research at Religare Broking.

Foreign portfolio investors (FPIs) were net sellers of ₹6,346 crore on Monday, while domestic institutional investors (DIIs) were net buyers of ₹9,014 crore.

The India VIX, a gauge of market volatility, rose to 23.36, its highest level since June 2024.