India's stock market fell over 1% on Monday, with Modi's warning combined with rising oil prices and turmoil in the Middle East sparking market concerns

Investing.com — On Monday, the Indian stock market plunged sharply, as worries about the economic impact of the Middle East conflict intensified, particularly after Prime Minister Narendra Modi issued a warning.

The Nifty 50 index fell 1.2% in early trading, while the BSE Sensex 30 index fell by 1.4%.

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At an event over the weekend, Modi repeatedly stressed the necessity of reducing gasoline and diesel consumption, calling on the public to take more energy-saving measures, including restarting remote work practices that were promoted during the COVID-19 pandemic.

He also urged the public to cut back on cooking oil consumption and asked farmers to reduce their reliance on imported fertilizers. In addition, he suggested that people revisit large expenditures at least within the next year, such as spending on gold purchases and overseas travel.

As Modi made the above remarks, reports said that New Delhi plans to significantly raise domestic fuel prices, due to the surge in global crude oil prices, which has further intensified pressure on local oil marketing companies.

Higher fuel prices could adversely affect India’s economy, because they would drive domestic inflation sharply higher, and fuel shortages could also disrupt India’s economic system, which is highly dependent on travel.

ANZ Bank said in a report that the concerns mentioned above are the main drivers behind the capital outflows from India’s stock market in April. The bank said that in April, India’s stock market saw approximately $5.2 billion in capital outflows.

The Nifty 50 index has fallen nearly 9% cumulatively so far in 2026, clearly underperforming other major markets in Asia. Much of the decline stems from the intense market turmoil after the U.S. and Israel launched a war against Iran in late February.

India is the world’s third-largest crude oil importer and also one of the largest crude oil-consuming countries. For the 2023-2024 fiscal year, India’s oil import dependency averaged 87.8%, and it is expected to rise further in the coming years.

The outbreak of the Middle East war has heightened concerns about India’s crude oil supply, because most of India’s oil and natural gas imports pass through the Strait of Hormuz.

At present, India has so far temporarily avoided a domestic fuel shortage by diversifying import sources—including Russia, the United States, and West Africa—and by running domestic refineries at more than 100% capacity.

However, as the fighting in the Middle East continues, the risk of disruptions to oil supply in the short term remains not to be ignored.

On Monday, international oil prices surged sharply. Previously, U.S. President Donald Trump largely rejected Iran’s response to a 14-point proposal aimed at ending the war. Trump threatened further action against Tehran last week, after U.S. military operations to reopen the Strait of Hormuz had further escalated the situation in the region.

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