Blasé Capital free fierce fall
Yet again, in another free fall, the Sensex, or the Bombay Stock Exchange index, fell by nearly 1,700 points. It marked the end of a rough week, or five trading sessions, when hopes were rekindled as the index gained almost 3,000 points, before it shed 2,500 of those, and closed at nearly 75,600 points. However, over the week, the gain of more than 500 points provided some relief to the investors, who have seen the Sensex engaged in a free, fierce fall from highs touching 86,000 points in November 2025, to more than 10,000 points down.
Yesterday's fall was premised on the reactions in the US stock markets the previous night (Thursday), when the Iran war and global crude oil prices “rattled global markets, impacting not just stocks but safe havens like bonds, gold, and currencies. That is leaving investors with fewer places to hide.” It was one of those rare days, when no asset class seemed safe, there was nowhere to go, and investors felt trapped in a dark, dingy cellar, with the only exit shut. People were reminded of the song with the lyrics, “Nowhere to run, baby, nowhere to hide.”
On Thursday, the US Dow Jones was down by one per cent, S&P 500 by 1.75 per cent, and Nasdaq by more than two per cent. Gold futures fell by four per cent, and investors sold bonds as treasury yields widened. On a larger basis, the S&P 500 is seven per cent lower than its high in January 2026, and gold fell 17 per cent in March 2026. The former may be on its way, say experts, to record its worst month since October 2008, which was the height of the ‘Great Recession.’ As we said earlier, you have got nowhere to run, baby, nowhere to hide.
Obviously, the overreaction, or shall we say understatement, in the markets came from contradictory war signals. Iran rejected the 15-point peace plan initiated by the US, even as America maintained that talks were on, and president Donald Trump gave Iran another period of reprieve until early April. Not sure, whether the war was ending, or peace initiatives were in place, global crude oil went up. As an analyst remarked, “There is really no clarity on when this war will end, despite a lot of confusing commentary.” Most of the latter comes from the ‘top,’
Another analyst took a more straightforward, yet philosophical, approach. “The Strait of Hormuz remains essentially shut, the conflict is not over, and Truth Social (president Trump’s) posts are not a replacement for concrete diplomatic discussions that can lead to a lasting end to the conflict across the region.” In a sense, statements cannot replace actions, and wishes cannot substitute for strategies. America’s strategy was that the war would end quickly. Now that it has not, there is no other blueprint in place, except for a possible demand of $200 billion from the Congress to continue to fight the war.
In the recent past, Trump’s statements about peace talks, peace points, peace pauses, and decimation of Iran moved the markets positively. But on Thursday (in the US) and Friday (in India), the possible pause in escalation raised hopes, which were dented by the lack of actual breakthroughs. Finally, on-ground actions trumped messages. In effect, according to analysts, the Indian markets were closed on Thursday, and were forced to play catch-up to the trends in the other markets. Thursday’s volatility in Asia and the US impacted Indian equities.
When a war is on, and each side, including those which are not directly related to the war, resorts to half-truths, hopes, propaganda, and realities, investors react to the present. But the present itself is vitiated, with no clarity. Hence, the reactions are knee-jerk, immediate, with no predictions of what is likely to happen the next day. Over time, investors tend to disbelieve the news and headlines, or over-believe them, which creates more volatility. Finally, the fed-up investors resort to profit-booking at every change they get, and can grab. This enhances the fluctuations, as momentum resets every few hours.
Indeed, on Friday, profit-booking was in the forefront. After the Sensex gained in the previous two sessions, investors lined up to make whatever gains were available. This explains why the Friday fall was broad-based, as the 16 major sectors logged losses. Apart from the large caps, and renowned stocks like Reliance Industries, the small-cap index slid by 1.7 per cent, and midcap one by more than two per cent. Only a few state-owned firms, like ONGC, gained. The oil explorer gained more than four per cent on Friday, and enjoyed its best week in the past two months, as it is a major beneficiary of high crude oil prices.
According to an analyst, “The Indian economy is strong enough to absorb the shock if the war ends, crude cools down, and gas availability becomes normal.” In essence, if things happened as if the war was never there, being played in the minds of the global leaders. However, he adds, “The market hope is that since a prolonged war is in nobody’s interest, it may end soon. The US itself is now looking for an exit strategy.” But exits are clouded by smoke, fire, and flames. Maybe some windows and ventilators will open, as the smoke clears up.
