The negative indications followed a sharp sell-off on Wall Street on Friday, where the three major US indexes closed lower amid geopolitical tensions in the Middle East and concerns about the health of the US economy.
The Dow Jones fell nearly 1%, posting its biggest weekly decline since April 2025. The S&P 500 fell 1.3%, while the Nasdaq Composite dropped 1.6%. U.S. markets were unsettled by a disappointing U.S. payrolls report that raised fresh concerns about a cooling labor market at a time when rising energy prices threaten to revive inflationary pressures.
However, the biggest shock came from the oil markets.
Crude oil prices rose sharply after the United States and Israel launched military strikes on Iran, raising tensions in the region and raising fears of long-term disruptions in global energy supplies. The Strait of Hormuz, an important global oil trade route, has been halted by the crisis.
U.S. crude futures rose more than 12% to $90 a barrel on Friday, while Brent crude rose about 8.5% to around $92. Analysts warn that prices will rise further if the conflict escalates, and some forecasts point to a possible $100 a barrel mark or higher.
High oil prices pose a direct risk to India’s markets and economy, given the country’s heavy dependence on oil imports. Rising energy costs are fueling inflation, widening the current account deficit and straining corporate margins in many sectors. The global risk-averse situation had already weighed heavily on Indian stocks last week.
The benchmark indices, Sensex and Nifty, fell nearly 3% during the week, marking their biggest weekly decline in a year. Selling was widespread, with 41 of the 50 Nifty stocks ending the week in the red, indicating broad-based pressure across sectors.
Financial stocks were among the biggest losers as investors reduced exposure to risk assets amid rising geopolitical uncertainty.
The market weakness was also reflected in the trading patterns during the week. Out of four sessions, the market declined in three sessions and closed higher only once, indicating cautious sentiment among investors.
Selling by foreign institutional investors and a weak rupee added to the pressure.
Although the market attempted a brief recovery on Thursday, supported by bargain hunting and slightly improved global cues, the rebound was short-lived. Selling resumed in the last trading session as crude prices rose further and global uncertainty deepened.
Technical indicators now suggest that the market is entering a period of high volatility.
Parvesh Gaur, senior technical analyst at Swistica Investsmart, said the Nifty currently has an important support level but remains vulnerable to further declines. “Nifty is supporting near 24,300 but remains very volatile. On the upside, the 24,900-25,000 range is likely to act as an immediate supply zone where selling pressure could build if the index tries to recover,” Gaur said.
He added that a decisive break below the 24,300 level could lead to further downside. “If the index breaks below 24,300, the next key support is near 23,800, which traders will watch closely,” he said.
Bank stocks could also remain under pressure. According to Gore, Bank Nifty is currently trading below its 100-day moving average but has found support near its 200-day moving average. The index faces immediate resistance near the 59,000-59,500 zone, while a break below 57,500 could extend the decline towards 56,700.
Looking ahead, analysts say the direction of equities will largely depend on three key factors: developments in Middle East conflicts, oil price movements, and foreign investment flows.
(Disclaimer: The suggestions, recommendations, views and opinions given by the experts are their own. They do not represent the views of The Economic Times.)
