Closing Bell: Israel-Iran conflict jolts Dalal Street; Sensex sheds 573 pts, Nifty ends at 24,718

The Indian equities market extended its losing streak for the second straight session on Friday as investors’ risk sentiment deteriorated following Israel's attack on Iran and rising international crude oil prices. The weak global cues and foreign institutional outflows further dented market sentiment. The India VIX index, which gauges the volatility in the markets, climbed 7.6% to settle at 15.08 points, indicating increased risk aversion among investors.

The BSE Sensex fell by 573.6 points, or 0.7%, to settle at 81,118.60, while the Nifty50 closed at 24,718.6, down by 169.6 points, or 0.68%. The broader market also settled in negative terrain, with the Nifty Midcap100 and the Nifty Smallcap100 sliding 0.24% and 0.43%, respectively.

"Indian equity benchmarks experienced downward pressure, driven by weak global cues and foreign institutional outflows. Market sentiment was notably impacted by heightened geopolitical tensions following Israel’s military strike on Iran, which significantly increased risk aversion among investors,” said Vinod Nair, Head of Research, Geojit Investments.

Among the BSE Sensex firms, 10 of the 30 stocks ended in the red, led by Adani Ports , ITC , State Bank of India, IndusInd Bank , and Hindalco Industries , falling in the range of 1.4% to 2.7%.

On the other hand, BEL, ONGC, HAL, Tech Mahindra , and TCS were among top gainers, advancing in the range of 1% to 1.8%. Among others, Cipla , Wipro , Maruti Suzuki India , Sun Pharma , and Eicher Motor also settled in positive terrain.

On the sectoral front, FMCG and Banking emerged as the top laggards, falling over 1% each. Nifty Metal, Financial Services, Auto, Energy, Pharma, Consumer Durables and Oil & Gas were among the other laggards.

Shares of defence companies saw strong buying in a weak market, with index heavyweights HAL, Bharat Dynamics Ltd (BDL), BEL, and others rising by up to 5% in the backdrop of escalated geopolitical tensions in the Middle East.

Meanwhile, shares of oil marketing companies, paint makers, and tyre companies saw selling after crude oil rose sharply following military strikes by Israel on Iran. Brent crude oil futures surged by up to 9% to touch a multi-month high of $75.60 per barrel, which may impact oil companies’ margins. 

Technical outlook

The initial reaction was largely driven by a sharp rise in crude oil prices due to geopolitical tensions in the Middle East. However, a moderation in CPI inflation helped limit the downside, said Ajit Mishra, SVP-Research, Religare Broking. “On the technical front, the Nifty slipped below its short-term moving average (20 DEMA) once again but witnessed a swift rebound after testing the lower end of the recent consolidation range (24,500–25,200). This suggests a possibility of continued consolidation in the index.”

“Given the prevailing scenario, traders should maintain a balanced approach with positions on both sides, focussing on stock selection driven by sectoral and thematic trends. It is advisable to avoid aggressive bets and manage risk prudently,” he added.

Rupak De, Senior Technical Analyst at LKP Securities, said the Nifty slipped sharply, breaching the 21-exponential moving average (EMA)—a key short-term moving average. However, it found support near the recent consolidation lows, leading to a strong intraday recovery.

“Going forward, the recovery could gain traction if the Nifty sustains above the 24,700 level. On the upside, the index may move towards 25,000 in the short term. Conversely, a decisive fall below 24,700 could trigger renewed bearish bets in the market," he said.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said that the overall chart pattern indicates a formation of a short-term top reversal pattern at 25,222 according to the daily timeframe chart. The short-term trend of Nifty is negative, but the medium-term trend remains positive.

“Nifty seems to have entered a broader high-low range of 24,500-25,100 again. Hence, any sharp weakness below 24,500 could possibly trigger a sharp selloff. However, any sustainable bounce from the support could pull Nifty towards 25,100 levels again in the near term,” Shetti explained. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)