Benchmark indices Nifty and Sensex extended their losses for the second consecutive day as rising geopolitical tensions in the Middle East and ongoing trade uncertainties weighed heavily on investor sentiment. A broad-based sell-off gripped the market, pushing all major sectoral indices into the red. The India VIX, a gauge of market volatility, surged more than 7%, signaling growing nervousness among investors.
At the close of trading, the Sensex had shed 573.38 points (0.70%) to end at 81,118.60, while the Nifty dropped 169.60 points (0.68%) to settle at 24,718.60. Advancing stocks numbered 1,520, while 2,326 stocks declined, and 124 remained unchanged.
Geopolitical Tensions and Oil Prices Drive Market Sentiment
V K Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out that the ongoing conflict between Israel and Iran could have significant economic consequences, especially if the situation escalates further. He highlighted that Israel’s military operations could extend for several days, with Brent crude already spiking by nearly 12% to $78 per barrel. Should Iran retaliate by shutting down the Strait of Hormuz, a critical oil supply route, prices could climb even higher. The market’s immediate reaction will largely depend on the duration of the conflict, but in the near term, a risk-off sentiment seems likely to dominate.
Sectoral Performance
The broader market saw a sea of red, with major sectoral indices posting losses. The Nifty PSU Bank index led the way down, dropping 1.51%, followed closely by Nifty Metal (-1.23%) and Nifty Bank (-1.17%). Other indices such as FMCG, Infrastructure, Energy, and Private Banks also faced declines of over 1%. Among the broader markets, the Nifty Midcap 100 and Smallcap 100 indices fell 0.4% and 0.5%, respectively.
Interestingly, the Nifty IT index, which opened in the green, ended flat despite broader market weakness. Meanwhile, the India VIX surged by 7.56% to 15.08, indicating rising market volatility and investor jitters.
Shipping and Defence Stocks Defy Market Weakness
While the broader market struggled, some sectors defied the trend. Indian shipping stocks saw strong demand, with shares of Shipping Corporation of India and GE Shipping surging up to 10%. This outperformance was driven by fears of global trade disruptions and a rise in tanker rates as vessels may need to reroute to avoid the increasingly volatile Strait of Hormuz. As a result, investor appetite for shipping stocks remained strong, driven by expectations of higher freight and tanker rates.
Defence stocks also made a strong showing, buoyed by hopes of increased defence equipment orders amid the growing global uncertainties sparked by the Israel-Iran conflict. The Nifty India Defence index surged by 2.5%, snapping a two-day losing streak.
Technical Outlook: Caution Advised
From a technical perspective, the broader trend remains intact, but caution is warranted in the near term. A bearish engulfing pattern has emerged, suggesting a potential short-term decline. The Relative Strength Index (RSI) has fallen from 60 to 55, pointing to a reduction in momentum. The Average True Range (ATR) has also increased slightly, indicating higher intraday volatility.
Immediate support for the Nifty is pegged at 24,800. A breach below this level could trigger a sharper decline, while 25,100 remains a key resistance zone. As for the Nifty Bank index, mild profit booking has pushed it towards its 20-Day Simple Moving Average (SMA), which is acting as immediate support. The index is hovering near the breakout zone of 56,000–56,200, and a sustained fall below this level could signal further downside risk.
Key Movers
Among the top gainers on the Nifty were Bharat Electronics, ONGC, Tech Mahindra, TCS, and Wipro. On the losing side, Adani Ports, Hindalco, IndusInd Bank, SBI, and ITC were the major laggards.
Final Thoughts
As geopolitical tensions continue to simmer and trade uncertainties persist, the market is likely to remain volatile in the near term. Investors should stay cautious, especially as key support levels are tested. While some sectors like shipping and defence may benefit from the current global scenario, broader market sentiment appears fragile, and a “risk-off” approach could dominate until more clarity emerges.
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