War shocks rattle D-Street. Will a quick recovery follow, like in the past?

Domestic equities tumbled under relentless selling pressure on Monday as the US-Israel and Iran conflict stoked fears of elevated crude oil prices and clouded India Inc’s earnings outlook for the coming quarters.India’s benchmark Nifty 50 fell 1.2% to 24,865.7, tracking weakness across Asian markets, though it fared marginally better than most emerging peers. Thailand led the declines, plunging nearly 4%, followed by Indonesia and Hong Kong, where benchmark indices slipped 2-3%.

China stood out as the exception, with the CSI 300 inching up 0.4%.Monday’s decline in Nifty was relatively modest compared with past global conflicts. The index had slumped nearly 5% in a single session when Russia invaded Ukraine in February 2022.

By contrast, after Hamas attacked Israel in October 2023 and during the Israel-Iran flare-up in April 2024, the benchmark fell just 0.3% and 1.1%, respectively.In each of these episodes, the market recovered to its pre-shock levels within nine days on average, Mint’s analysis of major post-Covid conflicts shows. The pattern suggests that geopolitical flare-ups typically trigger knee-jerk sell-offs, with sentiment stabilizing swiftly as greater clarity emerges.

This time, however, experts warned that the trajectory of Indian markets hinges squarely on crude oil prices, especially with major growth tailwinds already priced in.In fact, foreign portfolio investors (FPIs), who had turned selective buyers in February, may treat rising oil prices as a fresh trigger to pare exposure and stay cautious through the month, experts warned. On Monday alone, FPIs sold nearly ₹3,230 crore worth of equities, according to provision data from the National Stock Exchange.Crude prices have surged nearly 30% this year amid