Stock Market Crash: Sensex, Nifty slide nearly 2% — Which stocks to buy, hold or sell amid Iran-Israel crisis?

Escalating tensions between Iran and Israel triggered a sharp sell-off in domestic equities on Wednesday, with benchmark indices tumbling over 2 per cent in early trade amid concerns over crude oil prices, trade disruption and earnings risks across sectors.

The 30-share Sensex fell 1,664.38 points or 2.07 per cent to 78,574.47 at 9:31 am on Wednesday, after closing at 80,238.85 in the previous session, on Monday. It hit an intraday low of 78,443.20, down 1,795.65 points from the previous close.

The broader Nifty 50 opened at 24,388.80 against the previous close of 24,865.70 and slipped to a low of 24,315.45. From the previous close to the day’s low, the index dropped 550.25 points. At the time of reporting, Nifty was trading at 24,336.25, down 529.45 points or 2.13 per cent.

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Here is a sector-wise explainer on what is driving the fall and what global brokerages are recommending.

Oil & Gas Stocks: Gas value chain seen at higher risk

According to Citi, the Middle East conflict puts the gas value chain at greater risk than oil.

Qatar supplies around 40–50 per cent of India’s LNG imports. Citi said this would be difficult to fully replace, especially amid a surge in global gas prices. It flagged elevated volume risks for Petronet and warned that GAIL’s gas transmission volumes could be impacted.

Among city gas distribution companies, Gujarat Gas faces a higher risk due to its dependence on both Qatar and spot LNG.

On the oil side, upstream companies such as ONGC could benefit from higher crude prices, assuming there is no re-imposition of windfall tax. However, oil marketing companies may face margin headwinds. Reliance Industries could benefit in its oil-to-chemicals segment from stronger refining margins, particularly for diesel.

Citi maintained a ‘Buy’ on GAIL with a target price of Rs 195 against a current market price (cmp) of Rs 165. It retained ‘Sell’ on Gujarat Gas with a target of Rs 380 (cmp Rs 398) and ‘Sell’ on ONGC with a target of Rs 245 (cmp Rs 282).

Aviation Stocks: Flight cancellations and fuel spike risks

HSBC said the conflict has created near-term pressure for the aviation sector.

Geopolitical tensions have forced Indian carriers to cancel flights to the region and parts of Europe. HSBC said as much as 20 per cent of capacity at IndiGo, 32 per cent at SpiceJet and over 40 per cent at Air India could be affected.

Apart from direct losses due to cancellations, any spike in oil prices could hurt profitability as aviation turbine fuel costs rise.

HSBC maintained a ‘Buy’ on InterGlobe Aviation (IndiGo) with a target price of Rs 5,860 (cmp Rs 4,520). It retained a ‘Reduce’ rating on SpiceJet with a target of Rs 17 (cmp Rs 15).

Metals & Mining Stocks: Limited supply disruption seen

JPMorgan said the Middle East conflict could have implications for Indian metals and mining stocks but expects limited supply chain disruption.

It sees potentially near-term bullish risks for aluminium producers such as Vedanta and Hindalco. The brokerage said the Suez Canal now accounts for only 1 per cent of seaborne met coal and thermal coal supply, limiting disruption risk for coal.

It anticipates minimal supply chain impact for steelmakers and limited upside risk for Coal India.

JPMorgan maintained ‘Neutral’ on Coal India with a target price of Rs 397 (cmp Rs 426). It retained ‘Neutral’ on Vedanta with a target of Rs 680 (cmp Rs 723) and on Hindalco with a target of Rs 875 (cmp Rs 940).

Separately, CLSA said metals are better placed in a scenario of higher global energy prices as the global cost of production would shift upward.

Defence Stocks: Order momentum seen sustaining

Goldman Sachs maintained a positive outlook on the defence sector.

The Ministry of Defence has signed orders worth Rs 50.8 billion for six Advanced Light Helicopters (ALH) Mk-III for the Indian Coast Guard and VL-Shtil missiles for the Indian Navy. The ALH order was signed with HAL, while the missile order was signed with Russia’s JSC Rosoboronexport.

Goldman Sachs expects order momentum to sustain, supported by a favourable budget and a rise in Acceptance of Necessity (AoNs).

It retained ‘Buy’ on Solar Industries with a target price of Rs 18,900 (cmp Rs 13,989), on PTC Industries with a target of Rs 24,750 (cmp Rs 18,009) and on Bharat Electronics Ltd (BEL) with a target of Rs 470 (cmp Rs 453).

Capital Goods Stocks: L&T faces margin risks

Brokerages flagged risks for Larsen & Toubro due to its exposure to the Gulf region.

Macquarie said 37 per cent of L&T’s order book at the end of Q3FY26 is directly from the Middle East, with 33 per cent of order intake in 9MFY26 from the region. It noted that 55 per cent of the Gulf order book is based on fixed-price contracts.

Macquarie said evolving scenarios in the Gulf could pose risks to margins and flagged geopolitical and commodity risks earlier. It maintained ‘Outperform’ with a target price of Rs 4,910 (cmp Rs 4,066).

CLSA maintained ‘Accumulate’ with a target of Rs 4,842. It said weakness due to cyclical factors, such as the Middle East, should be seen as a buying opportunity for an emerging global energy infrastructure builder.

CLSA added that a potential blockade of the Strait of Hormuz for the entire month of March could shave 1.8 per cent off L&T’s consolidated earnings per share.

India Strategy: Trade, inflation and growth risks

Citi said the Middle East accounts for 14 per cent of India’s goods exports and 19 per cent of imports, led by the UAE. The exposure is significant in sectors such as autos and jewellery on the export side and oil and natural gas on the import side.

It warned of disruption risks in the Strait of Hormuz, through which 50 per cent of crude, 60 per cent of LNG, and almost all LPG imports flow to India.

Citi estimated that a 10 per cent rise in oil prices could lead to 30 basis points of upside pressure on inflation and 15 basis points of downside pressure on growth. It said fiscal intervention to stabilise retail fuel prices could allow the RBI to prioritise growth over inflation.

Sectors at risk include autos, select consumer discretionary, select capital goods and EPC players, select consumer staples, airlines and online travel agencies. It added that there could be a second-order impact on financials, defence manufacturing and IT services.

CLSA said a prolonged rise in crude could increase fuel costs for cement companies, which rely on imported coal and petcoke. Every USD 10-per-tonne rise in coal or petcoke could lead to an Rs 40–50-per-tonne impact on EBITDA, or 4–7 per cent.

Analysts said markets may remain volatile in the near term as investors track crude prices, developments in the Strait of Hormuz and policy responses.