Indian stock market tumbled on Monday as the escalating Iran war pushed crude oil prices higher and triggered investor flight to safe havens such as gold and the US dollar.
The Nifty 50 dropped 1.24% to a one-month low of 24,865.70 points while the BSE Sensex shed 1.29% to 80,238.85—the lowest in six months.
The rupee depreciated against the dollar, and government bond yields rose after the US and Israel struck Iran over the weekend, killing its supreme leader, which spurred retaliation from Tehran.
A spike in crude oil prices and trade disruption drive up the cost of imported goods, weakens the rupee and stokes inflation, squeezing businesses and households alike.
Brent crude surged 8.1% to $78.8 per barrel, and Iran closed navigation via the Strait of Hormuz, likely disrupting ~20% of global oil flows and more than 40% of India's crude oil imports.
Analysts warn that a prolonged conflict could push Nifty below 24,500 levels and delay rate cuts due to a renewed burst of inflation.
