US-Iran Conflict and Drug Tariffs Crash Indian Markets

Indian financial markets experienced a severe three-day downturn starting July 20, 2026, driven by the collapse of a June ceasefire between the United States and Iran. The federal government of the U.S. launched 11 consecutive days of military strikes on Iranian targets, while Iran retaliated with missile attacks on Jordan and Bahrain, and drone strikes on U.S. facilities in Al-Dawha, Kuwait. These hostilities disrupted shipping in the Strait of Hormuz and pushed Brent crude prices from $90 to a peak of $95.30 per barrel.

On July 22, the situation worsened after President Donald Trump announced a phased tariff structure for imported generic drugs. Starting August 1, 2026, imports will face zero tariffs for two years, followed by a 100% tariff for one year and 200% thereafter. This policy triggered a sharp sell-off in pharmaceutical and healthcare stocks.

The BSE Sensex and Nifty 50 indices declined for three consecutive sessions, with the Sensex eventually crashing 715 points to 76,755.05 on July 22, erasing approximately Rs 4.25 lakh crore in market capitalization. Heavyweight banking stocks, including HDFC Bank and Axis Bank, also plummeted following disappointing quarterly earnings. Simultaneously, the Indian rupee weakened to a two-month low of approximately 96.57 against the U.S. dollar, prompting the Reserve Bank of India to intervene with dollar-selling measures. Despite the crash, mid-cap stocks and the automobile sector showed relative resilience due to strong corporate earnings.