The market mood was grim at the start of the week as the escalating tensions in West Asia and foreign portfolio outflows dragged the Sensex down by 638 points, eroding investor wealth by over ₹8.90 lakh crore.

Market circles said the bearish trend has led to selling on every surge in stock prices.

Reflecting this behaviour, the 30-share gauge gained 449.32 points to touch 82137.77 but was met with selling pressure.

The Sensex plummeted 962.39 points from its highs to 80726.06, after which it settled at 81050 In the past six trading sessions, the Sensex tanked 4521.85 points or 5.28 per cent.

In the broader market, the BSE midcap index slumped 1.85 per cent, while the smallcap index was down 3.27 per cent.

“The most immediate risk for India is the potential surge in crude oil and petrochemical prices if the West Asian tensions escalate further, as these are significant imports for India. This could lead to cost increases in certain sectors and pose a temporary inflation risk,” Vikas V. Gupta, CEO and chief investment strategist, OmniScience Capital, said.

“Additionally, stocks have been falling in recent days amid fears that Israel is planning a significant retaliation following Iran’s missile attacks, which could widen the scope of the conflict,’’ Gupta said.

“Second, disruptions in sea lanes through West Asia could impact the supply chain for European goods coming from Asia, driving inflation in the EU.”

The longshoremen strike in the US is the third independent factor. “It is likely to disrupt the supply chain during the election season and festive period, resulting in inflationary pressure,’’ Gupta added.

Experts said investors will be watching out for two key domestic events which include the monetary policy decision on Wednesday and second quarter results from Tata Consultancy Services (TCS) the following day.

“Indian shares declined on Monday, driven by heightened tensions in West Asia. Foreign investors withdrew funds from Indian markets, shifting focus to more affordable markets such as China and Hong Kong,” Ameya Ranadive at StoxBox said.

“Even the exit poll outcome of the two states (Haryana and Jammu & Kashmir) are not in favour of the ruling government at the Centre, which has further dampened investors’ sentiment,” Prashanth Tapse, senior VP (research) at Mehta Equities Ltd, said.

Foreign institutional investors offloaded equities worth ₹8,293.41 crore on Monday.

Weak earnings

Ahead of the results season, a brokerage has come out with disappointing outlook for corporate India.

A report from Motilal Oswal Financial Services said the growth in Nifty earnings will be the lowest in 17 quarters.

“We estimate the MOFSL Universe earnings to remain flat (lowest in eight quarters) and Nifty earnings to grow marginally by 2 per cent year-on-year (YoY) in the second quarter ended 2024-25 (lowest in 17 quarters).”

“Ex oil marketing companies (OMCs), we expect the MOFSL Universe and Nifty earnings to grow 7 per cent YoY and 5 per cent YoY, respectively.”

The brokerage said overall earnings growth is expected to be primarily driven by banking, financial services and insurance, with expected year-on-year growth of 11 per cent.

Growth drivers also include technology (7 per cent), healthcare (15 per cent) and utilities (24 per cent) and the improved contribution of telecom.

On the other hand, the earnings growth could be weighed down by oil & gas (led by OMCs), which are anticipated to decline 33 per cent over the previous year along with metals (+2 per cent), cement (-41 per cent) and auto.