The markets are literally seeing a free fall now. The Nifty 50 has nosedived 2% intra-day, and the Sensex has crashed over 1,400 points. Not just the benchmark, the broader market is feeling the heat too. The small and midcap Indices are down over 2% each, and the metal space is bleeding like there is no tomorrow.
In fact, for the last 3 days, the markets have seen a significant correction. The Sensex is down nearly 3% in the last 5 days, and the Nifty has plunged 2.6% in the same period.
Nifty, Sensex down over 10% from January highs
Not just that, if we track the correction from the early January highs, the Sensex and the Nifty have seen a sharp downward spiral. Markets touched a fresh all-time high on January 5, 2026, but soon retracted. Things remained stable for a month and a half, but the dark clouds of global uncertainties, coupled with fears of AI disrupting jobs across the IT sector, deepened the cut.
On March 12, the Nifty crashed 10.21% from its 2026 high of 26,358.25, which it touched on January 05, 2026. The index took more than 2 months to reach that level, while the sharp fall started from the last week of February.
3 big concerns for the markets
Crude spike, Hormuz crisis
The crisis around the Strait of Hormuz and the escalation of the violence across West Asia have been one of the biggest concerns for the market. Crude prices spiked to 2022 highs in the last few sessions. The key concern about continued supply disruption around the Strait of Hormuz is spooking investors across the world.
Shortage and surge in energy prices
India imports 55–65% of LNG via the Strait of Hormuz, with Qatar alone accounting for 40% of India’s LNG imports. There is no quick alternative to the US, Australian, and African LNG, as it involves weeks of additional shipping time and limited spot availability.
Also, gas shortages are hitting industrial end customers in India as the country tries to direct the available domestic supplies to priority sectors like households, hospitals and fertilisers.
Even in the priority sectors, LPG cylinder bookings have been widely reported due to the lack of adequate gas supplies in India. Domestic LPG prices were raised by the government on March 07.
FII selling continues
One of the other big concerns for the markets has been the constant outflows by the foreign investors, right from the beginning of January. After a brief lull, the selling has gained momentum. In March, FIIs net sold over Rs 40,000 crore. Most market observers we spoke to indicated that India has become a ‘sell on every rally ‘ market for most foreign investors.
Rupee at record low
The FII flows also resulted in a sharp slide in the rupee. It has plunged to record lows below Rs 92 per USD. Continued FII flows and the high crude prices have impacted the currency significantly.
What is the outlook?
Shriram Asset Management, in a research note, said that conservative sell-side estimates suggest an increase of $20 per barrel of oil for a full year shaves off about 4% from earnings growth.
“We believe the impact to be higher as it also needs to account for disruption to gas availability, industry shutdowns, and potential loss of revenue. The tables below summarise the industry-wise impact of the disruption,” the report added.