Indian equity benchmarks opened more than 1% lower on Monday, March 2, tracking sharp declines across Asian markets after a full-scale war erupted in the Middle East over the weekend, triggering global risk aversion and heightened market volatility.

Key Highlights

• Indian markets fell over 1% as Middle East war sparked global risk-off sentiment and volatility.
• Gold and crude oil surged while equities declined amid escalating geopolitical tensions.

The sell-off followed coordinated military strikes by the United States and Israel on Iran, which reportedly resulted in the killing of Iran’s Supreme Leader, Ayatollah Ali Khamenei. The development has significantly escalated geopolitical tensions, sparking widespread uncertainty across global financial markets and intensifying volatility in commodities, currencies, and equities.

Asian markets traded sharply lower, while US stock futures slipped, reflecting growing investor caution. MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1.2%, underscoring the region-wide impact of the conflict. Market participants rushed toward safe-haven assets amid fears of further escalation and regional destabilisation.

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The conflict intensified after coordinated US and Israeli strikes targeted multiple strategic sites across Iran. In retaliation, Tehran launched missile attacks on Israel and US military installations, as well as strategic locations in Qatar, the United Arab Emirates, Kuwait, and Bahrain, raising concerns about a broader regional confrontation.

As investors sought safety, gold prices surged and crude oil rates spiked sharply, reflecting fears of supply disruptions. The US dollar strengthened against major currencies, while US 10-year Treasury yields stabilised near 3.97%, after briefly touching an 11-month low, highlighting elevated demand for secure assets amid rising geopolitical risks.