Geopolitical tensions trigger sharp erosion in market capitalisation

A fresh bout of volatility gripped Dalal Street in the closing days of the financial year, with investors losing nearly ₹9.4 lakh crore in market capitalisation amid escalating global tensions and risk aversion.

The sell-off was broad-based, cutting across sectors, as concerns over developments in the Middle East pushed crude oil prices higher and unsettled global financial markets. For India, the spike in oil prices has renewed worries over inflation and the current account balance, prompting investors to reassess risk.

Currency movements added to the unease. The rupee remained under pressure against the US dollar, reflecting sustained foreign fund outflows and a strengthening greenback. This, in turn, dampened sentiment in rate-sensitive sectors and import-dependent industries.

Foreign institutional investors continued to pare exposure to Indian equities, extending a trend seen through much of the year. The persistent selling has not only capped upside in the indices but also contributed to sharper intraday swings.

Market participants said the current phase reflects a combination of external shocks and cautious positioning ahead of key global cues. With uncertainty around commodity prices and geopolitical developments still elevated, volatility is expected to remain a defining feature in the near term.

Even as domestic fundamentals remain relatively stable, the recent correction highlights the extent to which Indian equities are now intertwined with global risk sentiment.