Oil shock rocks Dalal Street: Nifty slides 10% from Jan highs – Defence stocks defy sell-off while banks, autos bleed

Since the joint US-Israel military strike on Iran commenced on the morning of February 28, Nifty has dropped more than 10% from its January 5 high of 26,373, entering a technical correction zone that analysts say is being driven by one dominant variable: oil.

Operation Epic Fury, as the Americans called it, triggered immediate, significant  damage to the Indian market across nearly every sector. 

The defence sector was one key exception. It bucked the overall selling trend and briefly became the only index in the green. ONGC found buyers even as oil marketing companies (OMCs) collapsed. PSU banks bled the worst. Automakers, aviation, cement, paints each sector got cut in a different way, for a different reason. What follows is a sector-by-sector accounting of who took the hardest hits and who managed to profit since the war began.

The big losers: Indices that took the worst beating

The first reading of the damage was visible in the sectoral indices on the day the war broke out, and the losses only deepened through the week. Among Nifty’s thematic and sectoral sub-indices, PSU banks, auto, and transportation logged the steepest falls in a single session, while the broader theme of rate-sensitive and oil-exposed sectors continued to drag into the following week.

Source: Financial Express- Last  one week’s performance

The Nifty PSU Bank Index at 8,741.05 was the worst performer, down 4.83% in the first major session after the strikes on March 4. State Bank of India saw maximum loss, falling 5.46%. The Nifty Bank afell over 3.54%, in a single session. ICICI Bank dropped 3.05% while Axis Bank fell 2.95% to Rs 1,277. The sell-off in banks was not just about direct war exposure analysts noted that the spike in oil prices raised fresh inflation concerns, potentially pushing back any RBI rate cuts that the market had been counting on in 2026.

The Nifty Auto index shed 4.47% on the first war day, dropping 1,211 points to 25,865. Maruti Suzuki fell Rs 706 or 4.99% to Rs 13,453. Eicher Motors lost Rs 341, down 4.47% to Rs 7,279.50. Bajaj Auto fell Rs 438.50 or 4.47% to Rs 9,377.50. The auto index’s pain was a combination of oil-led input cost anxiety and demand disruption fears. Tata Motors Passenger Vehicles alone shed Rs 19.80 or 5.65% to Rs 330.95 in that session.

Hardest-hit stocks since February 28: A session-by-session rout

The damage at the individual stock level was sweeping. In the session right after the strikes, nearly every Nifty 50 constituent ended lower. The losses were steepest in names with the greatest sensitivity to oil prices and Gulf exposure.

Source: Financial Express | Prices as of March 6 session; Today’s change as of March 9 intraday mid-session

InterGlobe Aviation was among the single most damage-exposed names in the war’s fallout — Aviation Turbine Fuel costs track crude oil directly, making every $10 move in Brent a margin-compression event for the airline. InterGlobe Aviation fell 4.55% in the session on March 4 and was down another 5.5% in Monday’s trading on March 9, touching a 52-week low alongside Asian Paints, HDFC Bank, Tata Consultancy Services and Trent. The cumulative loss since the war began has been steep enough to prompt analysts to reconsider near-term earnings projections for the carrier.

Cement maker UltraTech’s fall of 5.11% reflected the same crude-inflation logic energy costs run high in cement manufacturing, and a prolonged oil price spike squeezes operating margins directly. Asian Paints, a major importer of crude derivatives for its inputs, dropped 3.02% to Rs 2,210.70, losing Rs 68.80 per share in a single session.

Oil Marketing Companies: The hardest fall in the war’s second week

If the first war week was painful for banks and auto, the second week, particularly Monday, March 9 turned catastrophic for oil marketing companies. Brent crude crossed $100 a barrel overnight and touched $119 by midday. Bharat Petroleum Corporation, HPCL , and Indian Oil Corporation cracked over 8% in early Monday trade, as crude at these levels obliterates refining margins when domestic fuel prices are not revised upward in sync.

OMCs are structurally squeezed in this conflict. They buy crude at international prices but sell fuel at government-regulated rates. The government, with an eye on inflation, is under no political pressure to raise petrol and diesel prices quickly which means BPCL, HPCL, and IOC absorb the margin compression on their own books. UBS downgraded Indian Oil Corporation to ‘Neutral’ on March 9, cutting its target price to Rs 175, directly citing the crude oil spike.

ONGC, however, was the exception. As an upstream producer that earns more when crude rises, Oil And Natural Gas Corporation was one of only two Nifty 50 stocks trading in the green on Monday up 1.28% to Rs 269.75. The same upstream logic applied to Oil India and, to a degree, Reliance Industries, whose upstream assets buffer the refining drag.

The key winner: Defence stocks in the green

On Monday, March 2,the first trading day after Operation Epic Fury the Nifty India Defence index was the only sectoral index that ended higher. It rose 0.89% to 8,199 even as Nifty fell 1.3%. Through the war’s first week, the index delivered a net gain of roughly 1.7%, a sharp divergence from virtually every other theme in the market.

Paras Defence and Space Technologies was the standout, surging 11.71% to Rs 712.50 on March 2 alone. The company also announced the incorporation of a new subsidiary, Paras Semiconductors, on the same day which added fuel to the rally. Bharat Dynamics shares climbed 7.2% to hit a high of Rs 1,375, while BEL closed at Rs 469.45, up 2.05%, touching a fresh all-time high of Rs 472.85 during the session. Data Patterns, a smaller-cap defence electronics name, jumped 9% in one session to Rs 3,190.

One false dawn: The March 5 bounce that didn’t hold

On Thursday, March 5, the market had its best session in over a month. Iran’s foreign minister signalled the country was ready to abandon its nuclear programme if Washington offered a credible alternative. Nifty gained 285 points or 1.17% to close at 24,765.90. Sensex added 899 points to settle at 80,015.90. Adani Ports, Hindalco, BEL, Reliance, and NTPC were the top Sensex gainers, rising up to 3%. Nifty Metal outperformed with a 2.3% gain.

That rally proved brief; by Friday, March 6, the Sensex dropped 1,097 points back to 78,918.90, and the Nifty fell 315 points to 24,450.45. Both indices ended the week down roughly 3% each, their second consecutive week in the red. FIIs sold equities worth Rs 6,030.38 crore on Friday. Over the four sessions prior to Monday, foreign portfolio investors pulled out Rs 21,000 crore (approximately $2.3 billion) from Indian equities. Domestic institutions absorbed much of that, buying Rs 6,971.51 crore on Friday alone.

On Monday, March 9, the market opened with Nifty at 23,868 and Sensex at 77,056 both falling sharply after crude oil prices crossed $100 a barrel. India VIX spiked 21% as 261 stocks advanced against 2,133 declining on the NSE. The rupee hit a fresh low of Rs 92.35 to the dollar by midday, compared to Rs 91.75 on Friday. Market capitalisation of BSE-listed companies dropped by a further Rs 3 lakh crore in early Monday deals.

Volatile times for the market

Ten days after Operation Epic Fury began, Dalal Street is continues to clock sharp losses. . Nifty has lost over 10% from its January peak. PSU banks are down nearly 7% on the week. Auto stocks are nursing 5–7% losses from pre-war levels. OMCs are the freshest casualty as crude topped $100 a barrel. IndiGo is hitting 52-week lows. The rupee is at Rs 92.35 to the dollar.

Against all of that, defence stocks delivered the war’s only clean gains Paras Defence up 11.71% in a day, BDL up 7.2%, BEL at an all-time high during intraday trade. ONGC, benefiting from higher crude realisations, stood as one of two Nifty 50 stocks in the green on Monday. These are the war’s financial winners not because investors want conflict to persist, but because their business models become more valuable precisely when everything else becomes more dangerous.