US-Iran War: One Month of Conflict Hits Indian Markets Hard

Introduction: A Month of Turmoil

Sunday, March 29, 2026, marks one month since the United States and Israel initiated a major military conflict with Iran. The war, which began with a decisive strike against Iran's leadership, has since plunged the Middle East into chaos, claiming over 3,000 lives and causing global energy prices to soar by more than 40%. For India, the consequences have been particularly severe, triggering a sharp downturn in financial markets and disrupting crucial energy supplies. Despite recent reports of indirect talks for a ceasefire, the situation remains volatile, with the possibility of further military escalation looming.

The Opening Salvo: Operation Epic Fury

The conflict began on February 28, 2026, with a joint U.S.-Israeli offensive codenamed 'Operation Epic Fury'. In the first 12 hours, nearly 900 strikes targeted Iran's military infrastructure, air defenses, and leadership. The initial attack successfully killed Iran's Supreme Leader, Ali Khamenei, along with several senior military and government officials. However, the operation also resulted in significant civilian casualties. A missile strike on a girls' school in Minab, later described as a "targeting error," killed between 165 and 175 people, drawing worldwide condemnation.

Iran's Retaliation and Regional Escalation

Iran's response was swift and widespread. The Islamic Revolutionary Guard Corps (IRGC) launched 'Operation True Promise-4', firing over 500 missiles and 2,000 Shahed drones at U.S. military bases in the Gulf and targets within Israel in the first 100 hours. The conflict quickly expanded as Lebanon's Hezbollah joined on March 2, launching rockets at Israel. This prompted forceful Israeli airstrikes across Lebanon, leading to over 1,200 deaths and the displacement of hundreds of thousands. Iran also asserted control over the Strait of Hormuz, a critical chokepoint for global oil shipments, significantly disrupting maritime trade.

A Timeline of Key Hostilities

The first month of the war was marked by a series of escalating attacks. On March 4, a U.S. submarine sank the Iranian warship IRIS Dena in the Indian Ocean, killing 87 sailors. On March 7, Israeli strikes targeted oil depots in Tehran, causing massive explosions and subsequent toxic "black rain." The U.S. continued its campaign by bombing Iran's Kharg Island, a key oil export hub, on March 13. A significant escalation occurred on March 21, when a joint U.S.-Israeli attack hit the Natanz uranium-enrichment facility, which was met with Iranian missile strikes on the Israeli cities of Arad and Dimona.

The 'Oil War' and Economic Strangulation

The third week of the conflict saw a dramatic escalation of the 'oil war', with both sides targeting energy facilities for the first time. Israel struck Iran's South Pars gasfield, the world's largest, which supplies 80% of Iran's domestic gas. In retaliation, Iran attacked regional energy infrastructure, including Qatar's Ras Laffan LNG plant and Saudi Aramco's Samref refinery. Iran's control over the Strait of Hormuz became a decisive factor, with reports indicating Tehran was charging fees as high as $1 million for safe passage, creating a 'Tehran toll booth' for non-allied vessels.

Severe Impact on Indian Markets

The financial shockwaves of the conflict hit Indian markets with force. Foreign Institutional Investors (FIIs) pulled out over ₹50,000 crore in the first few weeks of March, the worst outflow since January 2025. On March 2, the Sensex crashed 2,743 points, and the Nifty fell 533 points, wiping out between ₹6.8 to ₹8 lakh crore in market capitalization in a single session. The India VIX, a measure of market volatility, surged to nearly 20%. Sectors like aviation, autos, and banking were hit hard, with stocks like IndiGo falling 9%. In contrast, defence stocks such as HAL and Bharat Dynamics surged after the Indian government announced an emergency defence procurement worth ₹80,000 crore.

Diplomatic Maneuvers Amidst Conflict

As the economic pressure mounted, diplomatic efforts began to take shape. U.S. President Donald Trump announced a five-day postponement of strikes on Iranian energy facilities on March 23, citing "productive" talks, a claim Tehran initially denied. By March 26, it was confirmed that indirect negotiations were being mediated by Pakistan. The U.S. reportedly sent a 15-point peace plan to Tehran, to which Iran formally responded. Despite these backchannel communications, the U.S. Central Command confirmed it had struck over 10,000 Iranian military targets in the first month.

The Human Cost and Current Outlook

The human toll of the conflict has been substantial. According to a U.S.-based human rights agency, over 3,300 people have been killed in Iran, including approximately 1,400 civilians. The conflict in Lebanon has resulted in over 1,200 deaths and displaced 700,000 people. As the war enters its second month, the situation remains fluid. While a temporary pause in strikes on Iranian energy facilities is in effect until April 6, the presence of U.S. Marines and paratroopers near the Middle East keeps the threat of a ground invasion alive. The world is now watching to see if the fragile diplomatic off-ramp will lead to de-escalation or if the conflict will enter a new, more destructive phase.