Indian Stocks Head For Worst Month Since March 2020, Financials Lead Losses

ndian shares fell on Monday and were set for their worst month since March 2020, tracking broader declines in Asia as oil held above $115 a barrel amid an escalating Middle East war, while lenders slumped after the central bank's curbs on onshore exposures.

The Nifty 50 was down 1.20% at 22,551.35 and the BSE Sensex shed 1.28% to 72,645.29 as of 10:25 a.m. IST. The small-caps and mid-caps dropped 2% each.

Asian stocks declined 1.6%. Brent crude washeaded for a record monthly riseas the Middle East war intensified, with Yemen's Iran-aligned Houthis launching attacks on Israel and stoking fears of more disruptions to shipping lanes.

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The Nifty 50 and Sensex have lost about 10.5% each in March, putting them on track for their worst month since the COVID-19-led rout in March 2020, as elevated crude prices and record monthly foreign outflows worth $12.3 billion sapped sentiment.

The indexes are also down 4% and 6% each in financial year 2026, which ends on Monday. They are on course for their worst performance since FY2020, weighed down by India-Pakistan tensions, U.S. trade uncertainty in the first half and the Iran war in the second amid relentless foreign outflows.

"Assuming disruptions through Hormuz continue in April, we expect a more than 10% earnings hit for oil marketing companies, airlines, cement, tiles, paints and adhesives," said Mahesh Nandurkar, equity analyst at Jefferies.

FY2027 GDP could ease by 50 basis points, while India's corporate earnings may be cut by 2%-2.5% due the conflict, Nandurkar said.

Heavyweight financials, banks, private banks and state-owned lenders fell 2%-2.5% on Monday, after the Reserve Bank of India tightened position limits on onshore exposure - a move bankers say could trigger disorderly unwinding of positions and potential losses.

Among individual stocks, Hindalco and Nalco jumped 3.5% and 4.7%, tracking a surge in aluminium prices after the Middle East's two largest producers sustained damage in Iranian attacks over the weekend.