The West Asia Conflict Deepens

The conflict between US-Israeli forces and Iran which began in late February 2026 entered its most intense phase. Israeli strikes targeted senior Iranian military figures, while Iran responded with missile attacks on Israeli territory. On 18 March, Iran's South Pars gas field was struck. By 19 March, the conflict had broadened: Saudi Arabia's Ras Laffan loading facility and Aramco refineries came under attack from Iranian-linked drones, triggering another sharp wave of risk-off sentiment globally.

Today, The Wall Street Journal, citing US officials, reported that Iran launched two ballistic missiles toward the joint US-UK military base at Diego Garcia located approximately 4,000 km from Iranian territory in the Indian Ocean. One missile failed mid flight; the second was reportedly intercepted by a US naval asset. Confirmation of a successful intercept remains unclear.

The significance lies not in the outcome the strike failed but in the implied capability. Long-range Iranian ballistic reach of this scale alters threat perceptions across the Indian Ocean region, with direct implications for India's maritime security doctrine and its coordination with Quad partners.

Even as tensions escalated, the US Treasury issued a 30-day sanctions waiver permitting limited transactions involving Iranian crude already stranded at sea. Treasury Secretary Scott Bessent described it as a narrowly tailored, short-term authorization explicitly ruling out fresh production or new contracts with Iran.

Market intelligence estimates suggest 130–170 million barrels of Iranian crude are in floating storage globally. Asian refiners, including Indian companies, are cautiously evaluating re-entry into Iranian crude purchases though execution hinges on government guidance and compliance clarity. The US also released 45+ million barrels from its Strategic Petroleum Reserve and eased certain shipping regulations to further contain the price spike.

Indian Markets : The Selloff Continues

Indian equity benchmarks extended their sharp decline through the week. On 19 March, the Nifty50 fell 687 points to close at 23,090, while the Sensex shed 2,199 points to 74,504 one of the worst single-session declines of 2026. India VIX surged over 22% to settle around 22.80. From their 52-week highs, the Nifty is down ~11% and the Sensex ~12%, placing both firmly in correction territory. Over 400 stocks have lost double digits since the conflict began three weeks ago.

Worst hit : Nifty Auto, Financial Services, and IT. Downstream oil-linked sectors paint manufacturers, tyre companies, aviation firms bore the brunt of crude-driven margin compression. Aviation, where fuel is the single largest operating cost, was particularly vulnerable.

The Fed Pauses - With a Warning

The FOMC kept interest rates unchanged this week. But the substance lay in what Chair Jerome Powell said, not what the committee did. Powell explicitly acknowledged rising near-term inflation expectations due to the Iran crisis, stated that progress on inflation had stalled, and signalled that rate cuts projected for 2026 were effectively on hold pending clarity on the energy shock's duration.

US Treasury yields surged the 10-year note climbed to ~4.22% and the 30-year cleared at 4.87%. Briefly, the market even priced in a small probability of a rate hike the first time in over 18 months. For India, a persistently tight US rate environment reduces the appeal of emerging market assets, amplifying FPI outflows and rupee pressure.

Trade Deficit Narrows But Read the Fine Print

India's merchandise trade deficit narrowed to $27.1 billion in February 2026. Imports declined to $63.71 billion, while merchandise exports were broadly flat at $36.61 billion. On the surface, this looks encouraging. But the improvement was driven almost entirely by import compression rather than export acceleration an important distinction when judging the durability of the improvement.

The standout figure was services exports up approximately 25% year-on-year to $39.53 billion. This is the structural backbone of India's external sector. IT services, business process management, and digital outsourcing continue to demonstrate strong global demand, offsetting merchandise deficits at the current account level. This is why IT stocks have shown relative resilience even as broader markets have sold off sharply.

Government Acts : The RELIEF Scheme

The Government of India approved the RELIEF scheme this week a targeted policy intervention to support exporters disrupted by the West Asia conflict. The scheme combines risk coverage with cost reimbursement to help exporters manage rising freight costs, elevated insurance premiums, and longer transit times caused by the closure of key maritime corridors.

Crucially, the scheme is designed to preserve the existing export base not subsidise expansion. It offsets incremental costs to prevent disruption-led contraction in India's trade activity during a period of extraordinary external shock.

The sectors gaining most directly: textiles & apparel (thin margins, schedule-sensitive), pharmaceuticals (critical delivery timelines), engineering goods & auto components (global bidding competitiveness), and chemical manufacturers. MSMEs which contribute substantially to India's export base gain a critical liquidity buffer that improves creditworthiness and enables continued participation in international trade.

Reliance × Samsung : India Enters Clean Energy Trade

Reliance Industries formalised a binding 15-year supply agreement with South Korea's Samsung C&T Corporation for green ammonia. The deal is valued at approximately $3 billion, with supply commencing from the second half of FY2029. It positions Reliance as a credible participant in the global market for clean fuels and signals India's ambition to become a green hydrogen export hub.

Green ammonia produced using renewable-powered electrolysis is increasingly recognised as a decarbonisation solution for hard-to-abate sectors like shipping, steel, cement, and fertilisers. It also functions as an efficient hydrogen carrier for long-distance transport. Long-term offtake contracts like this are essential in capital-intensive sectors: they enhance project bankability, improve financing conditions, and demonstrate supply reliability to international buyers.

Deals of the Week : M&A Snapshot

Varun Beverages × Crickley Dairy - ₹131 Crore

Varun Beverages (VBL), one of PepsiCo's largest global franchisees, acquired 100% of South Africa-based Crickley Dairy through its subsidiary Bevco. The ₹131 crore deal marks VBL's entry into dairy and juice processing diversifying beyond carbonated beverages into categories with more stable, year-round demand. Crickley brings established processing infrastructure and distribution, reducing execution risk. A bolt-on acquisition with limited near-term financial impact but meaningful long-term optionality in an African market with strong consumption growth potential.

Macquarie × Maple InvIT - Up to $350–400 Million

Macquarie Asset Management is in advanced discussions to acquire a significant minority stake in Maple Infrastructure Trust (Maple InvIT), a CDPQ-backed roads InvIT platform, in a secondary stake deal valued at $350–400 million. Maple InvIT operates 3,000+ lane kilometres of toll roads with an enterprise value of ~$2 billion and annual revenues exceeding ₹770 crore. The deal reflects surging global appetite for India's stable, yield-generating infrastructure assets — and validates the InvIT model as a scalable vehicle for long-term institutional capital. Subject to regulatory approvals and unitholder consent.

The Bigger Global Picture

China's 15th Five-Year Plan : Formally adopted at the close of the National People's Congress, continuing Beijing's push for industrial self-sufficiency - with direct implications for global tech supply chains and India's manufacturing opportunity.

US Dollar Strength : Elevated US yields and risk-off flows drove significant dollar strength, amplifying pressure on the rupee and making oil imports more expensive in local currency terms.

Gold Near $5,010/oz : Safe-haven demand remained strong. In India, gold prices touched approximately ₹1.57 lakh per 10 grams driven by both global price gains and rupee depreciation

Airline Suspensions Extended : Major international carriers including Lufthansa and Emirates extended flight suspensions to regional hubs through at least 28 March, signalling a prolonged disruption timeline.

What to Watch in the Week Ahead

Final Word

This was a week defined by convergence geopolitical shock, monetary caution, currency stress, and corporate ambition all colliding in the same seven-day window. India's fundamentals have not broken. The RELIEF scheme, the Reliance green energy deal, resilient services exports, and continued M&A activity are reminders that even in the middle of a storm, the structural story keeps being written.