Indian equity benchmarks made gap-down start of the holiday shortened week tracking negative cues from Asian peers, as the Iran-Israel/US conflict entered its fifth week with no signs of a truce. Investor sentiment remained fragile amid persistent foreign fund outflows, with FIIs selling shares worth Rs 4,367.30 crore on Friday. However, markets pared some early losses but continued to trade lower by over 0.80% in early deals. Caution prevailed after the Finance Ministry flagged an uncertain near-term outlook, citing external shocks - particularly the West Asia crisis - as key downside risks due to elevated input costs and possible supply disruptions. Meanwhile, the RBI reported a $11.413 billion drop in India’s forex reserves to $698.346 billion for the week ended March 20, largely due to a decline in gold reserves. Investors also awaited February Index of Industrial Production (IIP) data for further direction. In the currency market, the rupee rebounded from its record low against the US dollar in early Monday trade.

On the global front, Asian markets were trading mostly lower as geopolitical tensions escalated after reports suggested that United States President Donald Trump raised an idea that American forces could seize Iran's Kharg island, its main oil terminal in the Persian Gulf.

The BSE Sensex is currently trading at 72940.42, down by 642.80 points or 0.87% after trading in a range of 72391.98 and 73165.32. There were 5 stocks advancing against 25 stocks declining on the index.

The top gaining sectoral indices on the BSE were Metal up by 1.59%, Energy up by 1.16%, Oil & Gas up by 0.93%, Basic Materials up by 0.33% and Utilities up by 0.12%, while Bankex down by 2.02%, Telecom down by 1.25%, Healthcare down by 1.00%, TECK down by 0.98% and Consumer Discretionary down by 0.92% were the top losing indices on BSE.

The top gainers on the Sensex were Bharat Electronics up by 1.25%, Reliance Industries up by 0.83%, Power Grid up by 0.41%, Titan Company up by 0.15% and NTPC up by 0.08%. On the flip side, Kotak Mahindra Bank down by 3.43%, Axis Bank down by 2.95%, Bajaj Finance down by 2.20%, Bharti Airtel down by 1.99% and Trent down by 1.61% were the top losers.

Meanwhile, raising concerns over India’s growth prospects, the Finance Ministry’s the Department of Economic Affairs in its Monthly Economic Review for March has said that the near-term outlook remains uncertain, with external shocks particularly the West Asia crisis posing downside risks to growth through elevated input costs and potential supply disruptions. Though, it noted that strong macroeconomic fundamentals and robust domestic demand may help cushion the impact. The geopolitical developments have introduced a complex and multi-layered set of risks for India, given its position as a major energy importer with strong trade, investment, and remittance linkages with the West Asia region.

It said the government's interventions across energy diversification, agricultural preparedness, inflation conditions, external sector strength, and policy measures support the economy's ability to absorb near-term disruptions arising from global developments, while ongoing monitoring and calibrated responses remain important in view of evolving conditions. While these interventions, along with existing macroeconomic buffers, provide some support, the balance of risks remains tilted to the downside. In this context, continued vigilance and proactive policy measures will be important to mitigate the impact of evolving global uncertainties.

It further said that the recent oil price shock presents an upside risk to the inflation trajectory in the medium term, as higher energy costs are gradually transmitted into domestic prices, particularly in fuel-intensive sectors. It said while supply disruptions have added to cost pressures, selective price corrections in perishables, amid export-related dislocations, point to localised demand-supply imbalances. Elevated global crude oil prices also pose risks to the merchandise trade balance, while the outlook for remittances also remains sensitive as the Gulf Cooperation Council economies accounted for about 38 per cent of India's total remittances in FY24 and host nearly half of India's migrants worldwide.

With regard to the current account deficit, the report said it widened to 1.3 per cent of GDP in Q3 of FY26, from 1.1 per cent of GDP in Q3 FY25, mainly driven by a larger merchandise trade deficit, notwithstanding continued strong performance in the services sector. During April-January FY26, it said gross FDI inflows increased; however, this momentum did not translate into higher net FDI, which remained subdued and has been negative for five consecutive months. Increased geopolitical uncertainty has dampened global risk appetite; as a result, the portfolio flows remained negative in March 2026. Foreign exchange reserves continue to remain comfortable, providing cover for more than 11 months of goods imports.

The CNX Nifty is currently trading at 22630.45, down by 189.15 points or 0.83% after trading in a range of 22470.15 and 22714.10. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 4.82%, Coal India up by 2.86%, ONGC up by 1.79%, Bharat Electronics up by 1.40% and Reliance Industries up by 0.82%. On the flip side, Kotak Mahindra Bank down by 3.39%, Axis Bank down by 2.90%, Shriram Finance down by 2.27%, Bharti Airtel down by 2.06% and Bajaj Finance down by 2.02% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 slipped 1768.07 points or 3.31% to 51,605.00, Taiwan Weighted lost 555.21 points or 1.71% to 32,557.38, Hang Seng declined 232.88 points or 0.94% to 24,719.00, KOSPI dropped 155.33 points or 2.94% to 5,283.54 and Jakarta Composite fell 27.99 points or 0.4% to 7,069.07. On the other hand, Shanghai Composite added 9 points or 0.23% to 3,922.72 and Straits Times was up by 1.33 points or 0.03% to 4,899.51.