Panic selling during a crisis is the wrong strategy
When geopolitical violence reshapes the map of power, markets become the first mirror of collective fear. On Monday, Indian exchanges opened to a sharp selloff as news of the reported killing of Iran's Supreme Leader and subsequent retaliatory strikes sent crude oil surging and investors retreating — a reminder that the price of distant conflict is never paid in one place alone. The Nifty50 and BSE Sensex each fell over one percent, the rupee touched a month-long low, and the Strait of Hormuz once again became the world's most consequential narrow passage. History counsels patience in such moments, even as the present demands vigilance.
- The reported killing of Iran's Supreme Leader and retaliatory missile strikes across the region detonated a weekend of geopolitical shock that markets could not absorb quietly.
- Brent crude leapt 6% to $77 a barrel — with Barclays warning of a possible surge toward $100 — as fears of supply disruption through the Strait of Hormuz, a chokepoint for one-fifth of global oil, gripped traders.
- The rupee breached Rs 91 per dollar for the first time in a month, with treasury officials bracing for further pressure even as the Reserve Bank of India was expected to intervene and hold the line.
- The selloff was uneven: oil-dependent sectors like airlines, paint makers, and tire manufacturers faced margin pain, while upstream producers and defence stocks found unexpected tailwinds in the volatility.
- Foreign institutional investors had already pulled Rs 7,536 crore from Indian equities on Friday, though domestic institutions partially cushioned the blow by buying Rs 12,293 crore on a net basis.
- Strategists urged investors not to panic, pointing to Covid, Russia-Ukraine, and Gaza as crises that left no lasting six-month scar — and advising gradual accumulation in banking, automobiles, and domestic consumption stocks.
Monday's opening bell on Indian exchanges rang into a storm. The Nifty50 closed down 313 points at 24,865.70, while the BSE Sensex shed 1,048 points to end at 80,238.85 — both indices falling over 1.2 percent as the weekend's geopolitical upheaval arrived on the trading floor.
The trigger was stark. Ayatollah Ali Khamenei, Iran's Supreme Leader for decades, was killed in missile strikes attributed to the United States and Israel. Four family members, including his daughter and a grandchild, also died. Iran responded with retaliatory strikes across the region, and the uncertainty that followed moved swiftly through global markets. Analysts at Geojit Investments warned of a long shadow over near-term sentiment, while Wealth Mills Securities noted that the conflict's expansion — particularly involving the UAE — had caught investors off guard.
The sharpest transmission came through oil. Brent crude surged 6 percent to $77.08 a barrel, with WTI not far behind. The deeper fear was not the price itself but the geography: over a fifth of the world's oil transits the Strait of Hormuz, and intensified military activity near that chokepoint raised the prospect of supply disruption. Barclays had already revised its Brent forecast to $100 a barrel, warning that oil markets might be facing their worst fears.
The rupee felt the pressure too, breaching Rs 91 per dollar for the first time in a month. RBL Bank's treasury desk expected an opening near Rs 91.50, though the Reserve Bank of India was widely anticipated to intervene before the currency slipped further.
The damage across sectors was selective. Oil marketing companies, airlines, paint and tire manufacturers, and chemical producers faced rising input costs. Upstream producers like ONGC and Oil India, along with defence names such as HAL and BEL, found themselves on the other side of the ledger. Foreign institutional investors had sold Rs 7,536 crore of Indian equities on Friday, though domestic institutions absorbed much of that with Rs 12,293 crore in net purchases.
Veteran strategists counselled against panic. Geojit's VK Vijayakumar pointed to a consistent historical pattern — Covid, Russia-Ukraine, Gaza — none of which left a lasting market wound six months on. His prescription: use weakness to build gradually in fundamentally strong domestic sectors, from banking and automobiles to capital goods and defence. The market had fallen. Whether that fall was a wound or a window remained the question investors would spend the coming weeks answering.
Monday morning on Indian exchanges opened to a sharp selloff. The Nifty50 index closed at 24,865.70, down 313 points or 1.24 percent. The BSE Sensex fell 1,048 points to end at 80,238.85, a decline of 1.29 percent. The immediate trigger was geopolitical upheaval in the Middle East that had unfolded over the weekend and sent shockwaves through global markets by the time trading began in India.
Iran's Supreme Leader, Ayatollah Ali Khamenei, an 86-year-old who had held the position for decades, was killed in missile strikes attributed to the United States and Israel. The attack also claimed the lives of four family members—his daughter and a grandchild among them. In response, Iran launched retaliatory strikes across the region, escalating a conflict that had already been simmering. The uncertainty rippled outward. Analysts at Geojit Investments noted that the war in West Asia would cast a long shadow over markets in the near term. Wealth Mills Securities flagged that the expansion of tensions, particularly involving the UAE, had caught investors off guard and would likely weigh on financial markets across multiple time horizons.
The most immediate pressure came through crude oil. Brent crude jumped 6 percent to $77.08 per barrel, while WTI crude gained 5.5 percent to $70.71 per barrel by mid-morning. The concern was not merely price but supply. Over one-fifth of global oil moves through the Strait of Hormuz, the narrow passage linking the Persian Gulf to the Arabian Sea. Intensified military activity in and around that chokepoint raised the specter of disruption. Barclays, the UK's second-largest bank, had revised its Brent forecast upward to $100 per barrel on Saturday, warning that oil markets might face their worst fears as the security situation spiraled.
The rupee bore the weight of this anxiety. The Indian currency breached Rs 91 per dollar for the first time in a month, a level that reflected both the flight from risk and the pressure of higher oil import costs. Treasury officials at RBL Bank expected the rupee to open near Rs 91.50 per dollar, though they anticipated the Reserve Bank would intervene to prevent a sharper fall, likely keeping it above Rs 92 per dollar.
The market impact was uneven. Sectors dependent on crude as an input—oil marketing companies, paint manufacturers, tire makers, airlines, and chemical producers—faced margin pressure from rising costs. Upstream oil producers like ONGC and Oil India stood to benefit from improved realizations. Defence stocks such as HAL and BEL saw positive sentiment. Foreign institutional investors had been net sellers, offloading Rs 7,536 crore of Indian equities on Friday alone, though domestic institutional investors provided some counterweight by purchasing Rs 12,293 crore on a net basis.
Market strategists urged calm. VK Vijayakumar, Chief Investment Strategist at Geojit, reminded investors that panic selling during crises is historically the wrong move. He pointed to precedent: the Covid crisis, the Russia-Ukraine war, the Gaza conflict—none had lasting impact six months after the initial shock. The current West Asian crisis, he suggested, would likely follow the same pattern, though wars do carry the risk of unexpected turns. His advice was to use phases of weakness to gradually build positions in fundamentally sound stocks, particularly in domestic consumption sectors like banking, automobiles, capital goods, and defence. The market had fallen, but the question for investors was whether the fall represented opportunity or the beginning of something worse.
Citas Notables
The uncertainty related to the war in West Asia will loom large over the market in the near-term— VK Vijayakumar, Chief Investment Strategist, Geojit Investments
An event like the present crisis will not have any impact on the market six months later. This is the takeaway from the market behaviour after the recent crises like the Covid crisis, Russia-Ukraine war and the Gaza conflict.— VK Vijayakumar, Chief Investment Strategist, Geojit Investments
La Conversación del Hearth Otra perspectiva de la historia
Why did the rupee fall so sharply when oil prices rose? Aren't they usually separate markets?
They're connected through India's import bill. We import most of our oil, so when prices spike, we need more rupees to buy the same barrels. Investors also get nervous about inflation and the current account deficit, so they sell rupees for safer currencies.
The article mentions that some stocks might actually benefit from this crisis. How does that work?
Oil producers like ONGC make more money when crude prices rise—their product is suddenly worth more. Defence stocks benefit because geopolitical tension increases demand for military spending and security. It's a rotation, not a universal loss.
Barclays predicted Brent could hit $100. Did it?
The article was written on Monday morning when Brent was at $77. Barclays made that forecast on Saturday, so we don't know yet if it held. But the fear of supply disruption through the Strait of Hormuz is real—that's where a fifth of global oil passes through.
The analyst said crises don't matter six months later. Does that comfort you?
It's historically sound, but it assumes the crisis doesn't escalate into something larger. A war can surprise you. That's why he said investors should be cautious even while building positions—not panic, but not complacent either.
What happens to ordinary Indians in this scenario?
If you're a salaried worker, inflation on fuel and transport costs hits your purchasing power. If you own airline or paint company stocks, your portfolio takes a hit. If you work in defence or upstream oil, your sector looks stronger. The domestic institutional investors buying on Monday were betting the weakness was temporary.