The rupee breached the 95 mark and fell to an all-time intra-day low of 95.22 against the US dollar on Monday before regaining some lost ground to settle at 94.70 after the Iran war escalation jolted global markets, fuelling rupee volatility and risk-off sentiment.The rupee gained initially after the RBI reduced the overnight net open position limit for banks to USD 100 million. But it reversed sharply later, falling towards 95.22 from the opening levels. Since the commencement of the West Asia conflict on February 28, 2026, the rupee has depreciated by 4.1 per cent.Domestic equity markets too ended sharply lower, with the Sensex tanking 1,635.67 points or 2.22 per cent to close at 71,947.55. The Nifty declined 488.20 points or 2.14 per cent to settle at 22,331.40.The major reasons behind the decline of equities were broad-based selling across sectors, lingering global uncertainties, elevated crude oil prices and sustained FII outflows, according to Bajaj Broking Market Commentary. Speaking with The Tribune, Karan Rijhsinghani, director and head (product and advisory), Atom Privé Financial Services, said the fall today was not a standalone reaction but an extension of the 10–11 per cent correction already underway this month. The decline was led by financial entities such as HDFC Bank and ICICI Bank, indicating tightening liquidity conditions and rising funding costs, with short-term rates moving closer to 7 per cent.Moreover, the crude price remaining above USD 110–115 per barrel is now directly impacting margin expectations across consumption and industrial sectors, while mid and small caps have corrected 10–15 per cent, reflecting positioning unwinds and reduced liquidity rather than a change in fundamentals. “From a near-term perspective, volatility is expected to remain elevated, with India volatility index (VIX) holding in the 20–25 range. Over the next five–seven days, markets are likely to remain volatile. A technical bounce of 2–3 per cent is possible, but it is unlikely to sustain unless crude prices cool and the rupee stabilises. Key levels to watch are 22,000 on the downside and 22,800–23,000 on the upside for Nifty,” he said.Rijhsinghani cautioned that investors should avoid aggressive bottom-fishing at this stage. The focus should be on reducing leveraged exposure and gradually reallocating towards high-quality large caps, particularly in banking and defensives.