Sensex Drops 3,800 Points This Week: Strait of Hormuz Tensions, Oil Surge and FII Selling Hit Markets

The Indian stock market remained under heavy selling pressure on Friday, March 13, with both benchmark indices continuing their decline for the third straight session. The BSE Sensex and Nifty 50 each fell around 1% during the session, extending weekly losses.

For the week, the Sensex has dropped about 3,800 points (nearly 5%), while the Nifty 50 has declined over 1,100 points (around 5%). The sharp fall has wiped out nearly ₹16 lakh crore in investor wealth.

Stock Market Performance This Week

On March 13, the BSE Sensex opened at 75,444, lower than the previous close of 76,034, and fell more than 900 points to an intraday low of 75,121.

Similarly, the Nifty 50 opened at 23,462 compared to its previous close of 23,639, and dropped over 300 points to an intraday low of 23,326.

The overall market capitalisation of companies listed on the Bombay Stock Exchange has fallen to around ₹434 lakh crore, down from nearly ₹450 lakh crore last week.

Key Reasons Behind the Market Sell-Off

1. Escalating US–Iran Conflict

Tensions between the United States and Iran have intensified since the conflict began on February 28.

Iran has reportedly targeted ships and military bases in the region and threatened to block the Strait of Hormuz, a critical global oil shipping route. Meanwhile, Benjamin Netanyahu and Donald Trump have issued strong warnings, raising fears of a prolonged geopolitical crisis.

Such uncertainty has negatively impacted global financial markets, including India.

2. Crude Oil Prices Cross $100

Global crude oil prices have surged above $100 per barrel, largely due to tensions in the Middle East.

Since around 20% of global oil supply passes through the Strait of Hormuz, any disruption could push prices even higher.

Higher oil prices are a major concern for India, as they can:

• Increase inflation
• Widen the current account deficit
• Put pressure on the rupee
• Reduce corporate profitability

3. Indian Rupee Hits Record Lows

The Indian Rupee has been weakening sharply and recently touched a record low of 92.3663 per US dollar.

A weaker rupee increases import costs and inflation, which can hurt the broader economy.

4. Heavy Selling by Foreign Investors

Foreign institutional investors have been aggressively selling Indian equities.

In March alone, FIIs have sold stocks worth ₹46,167 crore in the cash market. Although foreign investors have been net sellers since July last year, the current month has seen particularly intense selling pressure.

Such large outflows often lead to sharp market declines.

Read More: Centre Directs States to Prevent LPG Hoarding and Panic Buying Amid Supply Concerns.

5. Concerns Over Global Economic Outlook

Rising geopolitical tensions and high energy prices are also raising concerns about the global economy.

If oil prices stay elevated, inflation may rise worldwide. This could prompt the Federal Reserve to keep interest rates higher for longer, strengthening the US dollar and causing more foreign capital to exit emerging markets like India.

Conclusion

The sharp fall in the BSE Sensex and Nifty 50 this week highlights how global geopolitical tensions and economic factors can quickly affect market sentiment. Rising oil prices, a weakening rupee, and heavy foreign investor selling have created strong pressure on Indian equities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all related documents carefully before investing.