Nifty hits an 11-month low and breaks below 23,000 as Middle East tensions and oil shock rattle markets

The Nifty 50 index slipped below the psychologically important 23,000 mark on March 16, falling to around 22,955 intraday and marking its lowest level since April 11, 2025, as escalating geopolitical tensions in the Middle East and a sharp spike in crude oil prices weighed heavily on investor sentiment. The decline reflects growing concerns among global investors after the intensifying conflict involving the United States and Israel with Iran, along with disruptions in shipping activity through the strategically important Strait of Hormuz, a key artery for global oil and LNG trade.

The Strait of Hormuz accounts for roughly one-fifth of the world’s oil shipments, and fears of supply disruptions have already pushed crude oil prices above the $100 per barrel mark. The sudden oil shock has triggered risk-off sentiment across global markets as higher energy prices raise concerns over inflation, fiscal pressure and slower economic growth, particularly for energy-import dependent economies like India. Market participants are increasingly worried that sustained disruptions in oil supply could widen India’s trade deficit and put pressure on corporate margins.

The weakness in Indian equities is also visible in the broader performance of frontline stocks. Among the biggest losers in the index over the past month, Eternal Ltd has fallen about 24.72% to around ₹215.75, while Larsen & Toubro declined nearly 18.61% to ₹3,419.80. Trent Ltd dropped around 18.36% to ₹3,453, Tata Motors slipped about 18% to ₹309.35, and Mahindra & Mahindra fell nearly 16.55% to ₹2,929 during the period, highlighting broad-based pressure across sectors.

Despite the sell-off in several heavyweight stocks, a few defensive names have managed to outperform. Coal India has emerged as one of the top gainers over the past month, rising around 8.82% to ₹459.75, while Sun Pharmaceutical Industries gained about 6.30% to ₹1,807.70. NTPC Ltd advanced roughly 2.68% to ₹379 and Hindalco Industries rose around 2.07% to ₹926.20, suggesting that investors are rotating toward defensive and commodity-linked sectors amid the volatile macro environment.

Institutional flow data also reflects the sharp divergence in market participation. Foreign institutional investors (FIIs) have been aggressive sellers in Indian equities in recent months. In March 2026 alone, FIIs have sold equities worth about ₹56,883.22 crore in the cash segment. This follows net selling of roughly ₹6,640.78 crore in February and about ₹41,435.22 crore in January, indicating sustained outflows from overseas investors.

In contrast, domestic institutional investors (DIIs) have continued to provide strong support to the markets. DII inflows stood at around ₹70,526.70 crore in March so far, after investments of ₹38,423.11 crore in February and ₹69,220.74 crore in January. The robust domestic inflows have helped cushion the fall in Indian equities even as global risk aversion intensifies.

Market participants now remain cautious as geopolitical developments in the Middle East continue to unfold. Any prolonged disruption to energy supplies through the Strait of Hormuz or further escalation in the conflict could keep global oil prices elevated and maintain pressure on equity markets in the near term. Investors are closely tracking geopolitical signals and crude price movements, both of which are expected to remain key drivers for Indian markets in the coming weeks.