Indian equities slumped on Friday, with benchmark indices falling over 2% as fragile sentiment buckled under persistent geopolitical and macroeconomic pressures. The selloff was driven by profit booking after a mid-week rebound, rising global bond yields, and continued pressure from a weakening rupee amid elevated crude oil prices, experts said.
Benchmark Nifty 50 and Sensex closed at 22,819.60 and 73,583.22 respectively, each down nearly 1.3% over last week. They have now declined for the fifth consecutive week since 27 February, their longest losing streak since August 2025, when markets had fallen for six straight weeks amid tariff-related uncertainty, a Mint analysis shows. The ongoing war in West Asia started on 28 February 2026, when Israel, with US backing, launched a strike on Iran, triggering immediate missile retaliation and a wider regional conflict.
Rakesh Pujara, smallcase manager and founder at Compounding Wealth Advisors expects the selling pressure to persist into next week, with institutional investors likely to square off positions ahead of the financial year-end. He warned that without de-escalation in the war, elevated crude oil prices could further weaken the rupee against the US dollar and intensify cyclical outflows.
Rupee lows
The rupee hit a record low of 94.80 per dollar on Friday as Brent crude oil surged to $110 a barrel, with Tehran continuing with its retaliation against the US-Israel offensive. There was no sign of its alignment on US ceasefire proposals, raising uncertainty over near-term energy supplies.
Experts warn that persistently elevated crude oil prices could widen India’s current account deficit, push inflation higher and dampen economic growth in 2026.
Goldman Sachs has flagged these mounting macro headwinds as a key trigger for a looming earnings reset, halving its 2026 earnings growth estimate for India Inc to 8% from 16% earlier. The brokerage now expects a meaningful downgrade cycle to play out over the next two to three quarters—a possibility that is already driving capital flight, with foreign investors selling nearly $12 billion worth of equities in March, adding to the rupee’s weakness.
With dollar returns from Indian equities weakening, a combination of a rise in US Treasury yields amid lower expectations of a rate cut in the world's largest economy, and a strengthening dollar has tilted investor preference toward dollar assets over emerging markets, Pujara noted.
Leaders and laggards
Sectoral performance reflected the broader risk-off mood. Most sectors ended the week in the red, with only information technology (IT) and healthcare offering some support.
Realty emerged as the worst performing segment of the week, declining nearly 4%, followed by public sector unit (PSU) and energy stocks, both falling nearly 3% amid concerns over rising input cost pressures.
Pujara noted that elevated crude prices are pushing up construction costs across cement, steel, and petrochemical-linked inputs, compressing developers' margins at a time when passing on costs risks denting the already fragile real estate demand. This, coupled with FPI-led selling in mid- and small-cap stocks, where most realty names are concentrated, kept the sector under pressure this week, he added.
Defensives offered mild support. IT stocks rose 0.8%, while the broader technology index gained 0.4%. Healthcare stocks also showed relative resilience, ending largely flat for the week.
Dhanshree Jadhav, technology analyst at Choice Institutional Equities, noted that IT stocks found support due to attractive valuations, while a weaker rupee acted as a key tailwind. Given the sector’s dollar-linked revenues and largely rupee-denominated cost base, currency depreciation is improving near-term margin visibility and fuelling optimism around March quarter earnings, he added.
Global underperformance
Globally, Indian equities continued to underperform most major global markets during the week, though the sell-off was broad-based across regions.
South Korea’s KRX 100 and Kospi indices were the worst hit, falling 7% and 6%, respectively. China’s CSI 300 declined 1.4%, while Hong Kong’s Hang Seng fell 1.3%.
This broad-based weakness reflects a global risk-off environment, but India’s vulnerability to higher oil prices and sustained capital outflows has amplified the downside, noted experts.
Goldman Sachs has downgraded its stance on India from bullish to neutral, trimming its year-end Nifty 50 target rate to 25,900 from 29,300. This means in the current scenario, the market is anticipating Indian equities to end the year in the red.
Next week, the market will essentially be “a function of one variable—the trajectory of the US-Iran conflict,” said Pujara of Compounding Wealth Advisors. Any escalation could trigger a further slump, with 22,500 acting as the key support for the Nifty 50, while a credible de-escalation or ceasefire may spark a sharp rally, driven by short covering and a swift reversal in risk-off positioning.