Starting March 17, the Fed’s policy conclave will culminate in a March 18 verdict on interest rates—a decision amplified in importance by wartime oil shocks that have markets on edge for recessionary whispers.

Global crude benchmarks jumped 11% last week as conflict-related supply snarls tightened the market. For oil-import dependent India, sustained high prices spell trouble for inflation, trade deficits, and sectors from aviation to manufacturing, making every barrel tick a market mover.

Now in week three, the Middle East flare-up intensified with Trump signaling possible US strikes on Iran’s vital Kharg Island, a chokepoint for its oil exports. Escalation here could send energy markets into overdrive, battering global growth prospects and Indian exports.

FIIs yanked out a staggering ₹52,704 crore from Indian equities in early March, extending their bearish streak and eroding market sentiment. Domestic institutions have absorbed some pain, but the flow dynamics remain a sentiment barometer to watch closely.

The prior week delivered brutal losses amid regional strife: Sensex down 5.52% (4,354.98 points), Nifty off 5.31% (1,299.35 points). BSE’s aggregate market cap shrank by ₹20 lakh crore to ₹430 lakh crore from ₹450 lakh crore, underscoring the scale of the rout.

Losers dominated, with Nifty Auto plunging 10.64% on fuel woes, trailed by PSU Banks (-7.27%), Defence (-7.01%), Private Banks (-6.96%), Metals (-5.90%), Financial Services (-5.68%), Manufacturing (-5.60%), and Infra (-5.07%). Cyclicals suffered most from risk-off moves.

Looking forward, a softer Fed tone or war cease-fire talks might ignite buying, but entrenched oil highs and FII exits could prolong the slump. Savvy investors might hedge with gold or utilities, riding out the storm until clarity emerges from Washington and the warzone.

The calm was short-lived. Bearish momentum took hold swiftly, with Sensex tumbling around 200 points initially and Nifty breaching 25,300. By mid-morning, losses deepened: Sensex was down 447 points (0.54%) at 81,897.36, and Nifty retreated 124 points (0.49%) to 25,218.35.

NSE’s sectoral performance was largely negative, with nine out of 15 sectors in the red. IT and auto indices led the declines at 0.77% and 0.76% respectively, offset slightly by gains in metals. Realty and oil & gas managed 0.4% advances.

Midcap and smallcap indices provided a counterbalance, climbing 0.06% and 0.45% respectively. Market participants are closely watching the Economic Survey 2025-26, slated for tabling by FM Nirmala Sitharaman.

Gainers in the Sensex pack included L&T, Tata Steel, NTPC, Power Grid, SBI, Eternal, and Axis Bank. Losers were spearheaded by Maruti Suzuki, Indigo, BEL, Asian Paints, HUL, and Titan.

According to Choice Broking’s Hitesh Tayler, caution prevails despite supportive technicals. Future movements depend on global cues, oil dynamics, and FII/DII activities.

Recapping yesterday, Nifty held firm above 25,300 on India-EU trade hopes and upbeat globals. Key support at 25,200 shows resilience, but resistance looms at 25,400-25,500. Breaching lower could trigger further correction.

In this volatile environment, analysts recommend sticking to quality picks with solid fundamentals. Long positions make sense post a decisive Nifty breakout beyond 25,700.