Sensex, Nifty Tumble in Worst Week in 2 Years: How Israel-Iran Conflict and FII Outflows Triggered Market Crash

Indian stock markets had a tough week, with both the Sensex and Nifty 50 dropping for the fifth day in a row on Friday, October 4. This marked their worst week in more than two years. The fall comes amid concerns over the conflict between Israel and Iran, as well as heavy foreign investor withdrawals from Indian markets.

This week, the Sensex and Nifty 50 lost around 4.5% each, the biggest weekly decline since June 2022. Most of the damage came from Thursday’s sharp 2% drop. The market had been performing well for three straight weeks before this slump, but from their peak on September 27, the indices have now fallen more than 5%.

On Friday, the BSE Sensex dropped 808.65 points (0.98%) to close at 81,688.45. During the day, the index fluctuated wildly between a low of 81,532.68 and a high of 83,368.32. Similarly, the NSE Nifty 50 fell 235.50 points (0.93%) to settle at 25,014.60 after hitting a low of 24,966.80 and a high of 25,485.05.

Small-cap and mid-cap stocks, more focused on the domestic economy, also saw significant losses, with small-caps falling by 2.5% and mid-caps by 3.2% this week. Reliance Industries, a major player in the Nifty 50, was one of the hardest hit, losing 9.2% over the week.

Rising tensions in the Middle East have caused fears about disruptions in oil supplies, leading to higher crude oil prices. Since India is a net importer of oil, this price hike negatively impacts the economy. Analysts also pointed to large foreign investor outflows, with many investors redirecting their funds to China following its recent economic stimulus measures.

All these factors together have shaken market confidence, leading to significant declines in the Indian stock market this week.