Beyond Iran war, what drove sharp equity selloff in March? Aswath Damodaran explains

The energy sector is directly impacted by crude oil price surges due to the Iran war, affecting input costs for refiners and potentially boosting upstream producers. Financials face headwinds from rising bond yields and inflation expectations, which can impact lending rates and asset valuations.

Maintain a bearish bias on oil-importing sectors and a cautious stance on financials; consider hedging strategies for portfolios exposed to interest rate sensitivity.

For Indian markets, this story mainly matters for the Financials, Energy pocket. The current signal is bearish, so traders should watch whether the effect spreads across the sector or stays limited to a single name.

Watch whether the market validates this read through price action, volume, and breadth. If the headline matters, the signal should show up in execution, not just in commentary.

• •Aswath Damodaran stated the March equity selloff was a 'recalibration, not panic'.
• •Rising inflation expectations were a key driver of equities moving lower.
• •Higher bond yields contributed to the selloff.
• •Modest risk repricing also played a role amid uncertainty over the Iran conflict.
• •Risk flag: Continued escalation of the Iran conflict could further spike crude oil prices.