The escalation of the West Asia war into a 100-day conflict has combined with a violent structural unwinding of the global artificial intelligence trade to hit Indian equities. The combined market capitalisation of BSE-listed stocks collapsed by Rs 4.5 lakh crore as the Nifty index slid roughly 7%, exposing the domestic market to severe global crosswinds.
India’s equity ecosystem faces a dual threat: geopolitical stress that has pushed Brent crude above $96 a barrel, and a sharpening exit by foreign institutional investors (FIIs), who have dumped a record $28 billion year-to-date (YTD). This foreign flight intensified dramatically over the past two weeks, with nearly $4 billion in outflows driven by passive regional liquidations. The sell-off coincides with systematic downgrades to India's corporate earnings cycle, with analysts trimming CY26 MSCI India profit forecasts to 13% from 16% since the West Asia war began.
