India's stock market plummeted to a near one-year low as crude oil prices skyrocketed due to the escalating Iran war in West Asia. The 30-share S&P BSE Sensex fell 1.71% to 77,566.16 points, while the Nifty 50 lost 1.73% to 24,028.05, its lowest in 10 months.
The surge in crude oil prices, up nearly 30% since mid-2022, poses a significant challenge for India, which imports nearly 85% of its energy needs. This has led to a higher import bill, weighing on the rupee, which is already at a record low against the US dollar.
The Iran war, now in its second week, has stoked fears of prolonged supply disruptions through the Strait of Hormuz, adding to the supply constraints. Iraq and Kuwait have begun curbing oil output, further compounding the issue.
Experts warn that the sustained rise in crude prices will complicate the RBI's policy outlook, keeping inflation elevated and posing risks to growth. However, some see opportunities for long-term investors in sectors like pharma and IT.
The impact of the Iran war on India is severe, with the surge in energy costs threatening to widen the government's fiscal deficit, compress corporate margins, and place renewed depreciation pressure on the local currency.
