Sensex, Nifty down 3% in first four March sessions! 5 factors that could decide market mood this week

Indian stock markets declined sharply on Friday, with Sensex falling nearly 1,100 points and the Nifty50 closing below the 24,500-mark. Sensex tumbled more than 1,100 points to 78,870.95, while Nifty 50 fell around 320 points to 24,438.70 The sharp selloff wiped off nearly Rs 3 lakh crore from the total market capitalisation of all companies listed on BSE.

Here are 5 factors that could decide market action on March 9:

US, Israel and Iran war

The conflict between Iran and the US-Israel alliance continued to escalate, with leaders on all sides warning that the situation could worsen further. US Defense Secretary Pete Hegseth said the conflict has “only just begun”, while US President Donald Trump stated that he has “no time limits” on how long the war could continue.

US officials also indicated that the country has sufficient munitions to sustain military operations in the region for an extended period. The conflict in the oil-rich Middle East intensified over the weekend after the US and Israel carried out strikes on Iran that reportedly killed its Supreme Leader, Ayatollah Ali Khamenei. Iran responded with retaliatory attacks across several parts of the region. The absence of any clear diplomatic efforts to end the war has unsettled global investors.

Crude moves over $90

As Israel, the US and Iran trade strikes for an eighth straight day, oil prices have surged sharply. Just last week, before the conflict erupted, crude was hovering around $62 per barrel. By Friday, however, U.S. crude futures had spiked as much as 12% amid fears of supply disruptions, before trimming some gains. Brent crude settled at $92.69 per barrel, up $7.28, or 8.52%, while West Texas Intermediate (WTI) jumped $9.89, or 12.21%, to close at $90.90 per barrel.

Markets have been rattled as the escalating conflict in the Middle East has disrupted shipping and energy exports through the crucial Strait of Hormuz. This narrow chokepoint between Iran and Oman normally carries around one-fifth of the world’s crude oil and liquefied natural gas supplies. In practical terms, oil equivalent to nearly 20% of global demand passes through the strait every day. With the waterway effectively shut for the past seven days, roughly 140 million barrels of oil, about 1.4 days of global demand, has been prevented from reaching international markets.

FII exodus continues

Foreign investors remained net sellers of Indian equities during the previous session, selling shares worth Rs 6,030 crore, according to data on NSE. Domestic investors remained net buyers, purchasing Indian equities worth Rs 6,971 crore on Friday. FII have sold Indian equities worth nearlyRs 30,000 crore this month so far, as the war in the Middle East spooked investors.

Further, Morgan Stanley has reduced its exposure to Indian markets, while adopting a more cautious stance on Asian equities amid concerns that the Iran war may disrupt supply chains if oil flows through the Strait of Hormuz fail to recover. “We stay defensive,” Morgan Stanley strategists said, adding, “Asia remains critically dependent on Middle Eastern supply of crude oil, refined products and LNG and we believe the market is too complacent about supply chain risks.”

Disappoint US jobs data

The U.S. labour market showed signs of weakening in February, with the Bureau of Labor Statistics reporting that nonfarm payrolls declined by 92,000. This marked a sharp reversal from the downwardly revised gain of 126,000 jobs in January and was far worse than the 50,000 increase economists polled by Dow Jones had expected. The unemployment rate also edged up to 4.4% from 4.3% in the previous month.

“The headline number was very disappointing and will feed worries that the labour market — despite the strong January jobs report — is softening,” Tim Holland, chief investment officer at Orion told CNBC.

Weak technical set up

The Indian equity markets are likely to begin the upcoming week on a cautious note as global risk sentiment has deteriorated sharply. The current trend in GIFT Nifty, which closed around the 24,300 level, indicates a bearish undertone compared with the previous Nifty close near 24,450, Hariprasad K of Livelong Wealth said.

This combination of macroeconomic uncertainty and geopolitical risk is likely to influence market sentiment in the near term. Unless there is a positive development in the Middle East conflict that brings crude oil prices lower, Indian markets could witness continued volatility.

From a technical perspective, Pravesh Gour of Swastika Investmart said that Nifty is taking support near 24300 but remains highly volatile. On the upside, the 24,900–25,000 range is expected to act as an immediate supply zone, where selling pressure could emerge if the index attempts a recovery. On the downside, 24,300 remains the first key support, and if the index slips below this level, 23,800 will be the next important support area that traders will closely monitor.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)