More Pain Expected In the Market?

Market Update - Monday, 2 Mar

The stock market experienced a difficult start to the month on March 2, 2026, as geopolitical tensions in the Middle East picked up steam over the weekend. For India, the primary concern remains the price of oil, which is the major issue at hand. Beyond the impact on energy costs, the regional conflict itself has less direct bearing on India, though the human life loss and economic damage are significant.

From a market perspective, it is a historical reality that stock markets often thrive after wars due to the subsequent rebuilding, reconstruction, new capacities, and relocations that follow.

The current situation centers on the Strait of Hormuz, a critical choke point for global energy located between Iran, the UAE, and Saudi Arabia. Approximately 20% to 30% of the world's oil passes through this narrow bend. Because Iran sits right on the strait, it controls much of what happens there, affecting capacities from Saudi Arabia, Qatar, and Iran itself.

While the situation is messy, the hope is for a quick restoration of peace. Despite the Indian market losing about 1.24% today, this is not necessarily bad news given the magnitude of the event. We were at similar levels in early February without a war, so nothing catastrophic has happened yet, though the future remains uncertain.

• Looking at the indices, the Nifty Junior opened low but tried to make a comeback, ending down 1.5%.

• Mid-caps recovered halfway from their lows to end down 1.7%, while small-caps fell 1.89%. Most charts are near their support levels, but if today’s lows are broken, we could see very sharp falls.

• The Nifty Bank also dropped 1.14%. Conversely, gold rose 2.6% and is nearing an all-time high daily close.

• Gold already had an upward trajectory, and the war has provided more tailwinds. We may see a mass frenzy if it crosses previous highs, or it could form a double top and move sideways.

• Silver also rose 2%, though it remains far from its previous highs at 296,619.

Other Market Triggers

• The heat map was almost entirely red, with big hits to major stocks like L&T, which fell 4.9% likely due to its projects in the Middle East.

• Maruti and Tata Motors both dropped 3%, while Reliance fell 2.5%.

• In the Nifty Next 50, Hindustan Zinc, Vedanta, and Solar Industries were among the few gainers.

• Interestingly, the India VIX moved up 25%. While 17 is not historically high compared to previous decades, it is a significant climb from the level of 9 seen at the start of 2026, indicating a rising fear factor.

• Tejas Networks stood out as a pocket of strength, rising to 484 rupees on a big 5G deal. Such stocks should be on any watch list for discretionary trades as they defy market conditions.

U.S. Market Updates

• In the US markets, the previous session saw heavy losses for American Express, Goldman Sachs, Morgan Stanley, and Wells Fargo.

• Tonight will be a crucial night for US markets to fully price in the Middle East situation, and the Indian market will react to those global cues tomorrow. Some of these stocks are featured in the weekend investing US stock strategy, though these are not recommendations.

• On the NASDAQ, Nvidia and Apple lost over 3%, while Walmart, Costco, Google, and Amazon gained ground.

What to watch next ?

• Ultimately, today's activity suggests that traders should focus on sectors and stocks that are defying the general downward move.

• While it may sound unfortunate, war is often a way of running economies. The US is particularly expert in this field, as their entire economic thesis and defense industry rely on the push that conflict provides.

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What To Read This Week ?

The Wealth Grab: Taxing Gains You Haven’t Made Yet

The Netherlands Experiment: Mark-to-Market Taxation

Imagine owning a stock that goes up in value, but you don’t sell it. In the eyes of the Dutch government, you’ve still "made" money. The Netherlands is proposing a shift where investors must mark-to-market their portfolios at the end of the fiscal year (e.g., December 31st).

If your portfolio is up, you pay tax on that "paper profit" immediately. While they offer tax credits if the asset drops the following year, the immediate liquidity drain on investors is unprecedented.

The Survival of the Debt-Based System

Why is this happening? It’s a survival tactic. Most global economies are running on a debt-based treadmill. Governments are spending far beyond their means:

• USA: Running a deficit of approximately $2 trillion over their tax revenue.

• India: Maintaining a budget deficit of around 4.5%.

To keep the engine running and service this massive debt, governments are hunting for new avenues of revenue. When traditional income and capital gains taxes aren't enough, they look toward your "unrealized" wealth.

The "Runaway Train" Effect

The concern isn't just limited to Europe. If this "successful" revenue model takes off in the Netherlands, it acts as a blueprint for the US, the rest of the EU, and potentially India. We are witnessing a global trend where purchasing power decreases while the tax net widens. Without a move toward "Sound Money" (assets backed by real value rather than reckless printing), we are essentially on a runaway train.

Key Visualizing the Shift

The Illusion of Ownership: In a deficit-heavy monetary system, your "assets" are increasingly viewed by the state as future tax revenue. True financial security requires understanding that the "rules of the game" (taxation) can change even if you don't trade.

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