Indian Stock Markets Tumble Amid Rising Iran-US Tensions

Mumbai, June 12, 2025

Indian Stock Markets React to Geopolitical Uncertainty

In a volatile session on Wednesday, the Indian stock markets ended in the red, as escalating tensions between Iran and the United States spooked investors and triggered broad-based selling. Key indices — the BSE Sensex and NSE Nifty — closed lower, breaking a multi-day winning streak, driven by cautious sentiment in global financial markets.

The Indian stock markets had opened on a flat note, but weak cues from Asian and European counterparts, coupled with rising oil prices due to geopolitical anxiety, soon turned sentiment sour. The Sensex closed at 74,362, down 493 points, while the Nifty 50 ended at 22,564, shedding 137 points.

Global Geopolitical Risk Weighs on Indian Stock Markets

The sudden drop in the Indian stock markets is being largely attributed to the intensifying standoff between Iran and the US. Reports of potential military responses and diplomatic fallout sent shockwaves through global markets, with investors retreating from equities to safer assets like gold and bonds.

Oil prices also surged sharply, raising concerns over India’s import bill and fiscal stability. Since India is heavily dependent on oil imports, a spike in prices usually translates into inflationary pressure — a red flag for investors in the Indian stock markets.

Sector-Wise Impact on Indian Stock Markets

Almost all sectors ended the day in the red. Banking and financial stocks, which have a high weightage in the indices, were among the top laggards. HDFC Bank, ICICI Bank, and Axis Bank saw losses ranging from 1% to 2%. Meanwhile, oil marketing companies and airline stocks also took a hit due to rising crude prices.

On the other hand, a few IT companies managed to limit their losses thanks to the weakening rupee, which often acts as a tailwind for their dollar-denominated revenues. However, the marginal gains in tech could not offset the broader decline in the Indian stock markets.

FII Outflows and Domestic Sentiment Turn Cautious

The Foreign Institutional Investors (FIIs), who have been net buyers over the past few weeks, turned sellers amid the geopolitical concerns. Provisional data suggested an outflow of over ₹1,200 crore in today’s session. This shift added to the pressure on the Indian stock markets, reflecting heightened risk aversion.

Domestic investors also appeared wary, pulling back from aggressive positions and opting for a wait-and-watch approach until more clarity emerges on the Iran-US conflict. Market analysts suggest that continued volatility in the Indian stock markets is likely if the geopolitical situation escalates further.

Expert Outlook: More Volatility Ahead for Indian Stock Markets

Market experts warn that the road ahead remains uncertain for the Indian stock markets. “If geopolitical tensions intensify, we could see another wave of global risk aversion that impacts capital flows and currency markets,” said Rajiv Mehra, a senior analyst at a Mumbai-based brokerage.

He added, “Investors should stay cautious in the short term and avoid high-risk bets. Safe-haven assets may outperform equities until the situation stabilizes.”

Conclusion: Defensive Strategy Recommended for Indian Stock Markets

Given the current geopolitical climate, investors are advised to adopt a defensive strategy and limit exposure to sectors directly impacted by oil prices and international trade. Analysts are also encouraging a focus on companies with strong balance sheets and minimal foreign exposure.

While the long-term fundamentals of the Indian stock markets remain intact, short-term risks could lead to increased volatility. As such, investor discretion and diversification are key to weathering the ongoing uncertainty.