Sensex Plunges 900 Points: Impact of US Attack on Iran and Rising Oil Prices on Indian Markets

by Ashok

Posted on June 23, 2025

Why Did the Sensex Crash 900 Points After the US Attack on Iran?

The sharp fall in the Indian stock market, with the Sensex crashing over 900 points, is primarily driven by escalating geopolitical tensions following the US attack on Iran’s nuclear sites. Several interconnected factors have contributed to this decline:

1. Geopolitical Escalation and Market Sentiment

• The US, alongside Israel, launched strikes on three major nuclear facilities in Iran, marking the most significant military action against Iran since 1979.
• This escalation has heightened fears of a broader conflict in the Middle East, leading to global risk aversion. Investors are concerned about potential retaliatory actions by Iran, which could further destabilize the region and global markets.

2. Surge in Crude Oil Prices

• Brent crude futures jumped nearly 2% to around $78 per barrel, and WTI crude rose similarly, reaching their highest levels since January.
• The spike in oil prices is largely due to concerns that Iran might retaliate by closing the Strait of Hormuz, a critical chokepoint through which a significant portion of the world’s oil supply, including about 45-50% of India’s crude imports, passes.
• Higher oil prices are negative for India, which is heavily dependent on oil imports. Rising crude costs increase inflationary pressures, worsen the current account deficit, and can lead to higher input costs for Indian companies, all of which dampen market sentiment.

3. Broader Global Market Weakness

• The Indian market decline mirrored a broader sell-off across Asian and global equities, with major indices in Japan, Hong Kong, and Seoul also falling. US futures were down as well, reflecting global investor nervousness about the conflict’s impact on energy markets and economic stability.

4. Volatility and Sectoral Impact

• The India VIX, a measure of market volatility, spiked by 5%, signaling increased uncertainty among investors.
• Most sectors saw broad-based selling, especially IT, auto, FMCG, and financials, as investors moved to reduce risk. However, defense stocks bucked the trend and gained, reflecting expectations of increased defense spending amid geopolitical tensions.

5. Additional Factors

• Profit-booking and expiry-day volatility also contributed to the sharp fall, as investors locked in gains from the previous week’s rally.
• Weakness in global tech spending, highlighted by disappointing results from major IT firms, further weighed on Indian IT stocks.

Summary Table: Key Drivers of the Market Fall

Conclusion

The Sensex crash is a direct reaction to heightened geopolitical risks after the US attack on Iran, with the surge in crude oil prices and fears of a wider conflict weighing heavily on investor sentiment. The situation remains fluid, and markets are likely to remain volatile as investors watch for further developments, especially any retaliatory moves by Iran and their impact on global oil supplies.

Ref: Sensex crashes 900 points; why is Indian stock market falling after the US attack on Iran? Explained with key factors