Indian markets were closed for Holi on Tuesday, with investors reacting to Trump’s comments on Wednesday that the dispute was “always a four-week process” and could last “four weeks or less”. He said he was ready to talk with Iran but did not say whether the talks would take place soon.
On Monday, equity markets were already reeling under geopolitical pressure. The BSE Sensex fell 2,743 points in early trade before paring losses to end 1,048 points lower at 80,238, down 1.29%. The Nifty also fell sharply, closing at around 24,850. The total market capitalization of BSE listed companies fell by Rs 6,59,978 crore.
Siddhartha Khemka, head of research at Motilal Oswal Financial Services, said the selling reflected a clear move away from risk. He said: “India’s currency witnessed a sharp decline as the risk reaction was triggered by rising tensions in West Asia. Markets reacted to US and Israeli attacks on Iran and subsequent regional retaliation, which started to fly to safe havens.”
With Trump now signaling a potentially prolonged conflict, market participants will be watching crude oil and global cues closely when trading resumes.
Vinod Nair, head of research at Geojit Investments, said rising crude oil prices and a weaker rupee reflected concerns about potential disruptions in oil supplies, which could increase inflationary pressures in India, affect the fiscal balance and ease pressure on energy and chemical-related sectors.
He added that India’s VIX rose, indicating greater uncertainty and risk aversion, while selling by foreign institutional investors accelerated following a rise in crude oil. Also Read | NFO Insights: Will TRUSTMF’s Mid-Cap Fund GARV and LIM Strategy Help Identify Quality Mid-Cap Opportunities?
Technically, analysts see the market in a weak but potentially oversold zone.
Shrikant Chauhan, head of equity research at Kotak Securities, said the market is trading well below the short- and medium-term averages and on the intraday charts, it has a weak structure, which is largely negative. However, he added that the market appears to be oversold and the possibility of a technical bounce cannot be ruled out.
Analysts see 24,750 in Nifty and 80,000 in Sensex as key support levels. “As long as the market trades above this, the pullback formation is likely to continue,” Chauhan said, adding that on the upside the Nifty could move towards 25,000-25,075. However, a break below 24,750 could push the index to 24,650-24,500.
Gaurav Udani, founder of Thincredblu Securities, sees immediate resistance around 25,100 in the Nifty, with support in the 24,550-24,600 range. “A sustained break below this support band could extend the downward pressure, while reasserting resistance is necessary for short-term stability.” Given the rising geopolitical uncertainty, he advised traders to remain cautious and avoid leveraged positions.
The key variable for Wednesday’s trading will be oil. A sustained rise in crude oil could dampen inflation expectations, pressure the rupee and complicate the interest rate outlook. If crude oil stabilizes or cools, markets may seek relief from oversold levels.
Oil prices rose slightly on Tuesday as tensions between the United States, Israel and Iran escalated. U.S. West Texas Intermediate crude rose more than 1% to $70.59 a barrel by 11:48 GMT, extending gains from the previous session when prices rose nearly 14%.
((rejection: The recommendations, suggestions, opinions and views given by the experts are their own. (It does not represent the views of The Economic Times.)
