The war in the Middle East escalated sharply on Monday, intensifying fears of a prolonged and destabilizing conflict. The killing of Iranian Supreme Leader Ayatollah Ali Khamenei, combined with sustained military strikes and no visible diplomatic exit plan, has significantly raised geopolitical risk.
Israel and the United States targeted Iranian missile infrastructure and naval assets, claiming destruction of key headquarters and warships. Iran also reportedly launched retaliatory attacks on US-linked assets across several neighboring countries, including the UAE, Bahrain, Qatar, Saudi Arabia, Kuwait, Jordan, Iraq, and Syria.
Airstrikes struck Tehran, while senior Iranian security official Ali Larijani declared on X:
“We will not negotiate with the United States.”
The absence of dialogue and the expanding theatre of operations have unsettled global markets. Investors are now recalibrating risk — with crude oil emerging as the central variable.
According to Vikram Kasat, Head – Advisory at PL Capital, global risk appetite remains fragile amid rising crude prices.
“The ongoing war-related developments have kept global risk appetite fragile, particularly with crude oil prices inching higher. A sustained rise in oil remains a key monitorable for India, given its implications on inflation, fiscal math, and corporate margins.”
For India, crude is not just another commodity — it is a macro lever. Higher oil prices feed directly into inflation, pressure the fiscal balance, and compress corporate margins.
What should investors do?
Kasat believes markets are expected to remain headline-driven in the short term, with crude prices and geopolitical developments dictating direction. Despite near-term headwinds, domestic macros remain resilient, supported by steady earnings expectations and sustained SIP inflows, he added.
“Investors should stay selective and focus on quality balance sheets and earnings visibility,” suggested the expert.
Meanwhile, Vinit Bolinjkar, Head of Research at Ventura, highlighted the magnitude of the crude move.
“With Brent crude spiking 10% toward $80/barrel and the Rupee testing 91.20, we expect the Nifty to test its 24,500 support as markets price in an energy-led inflationary shock,” Bolinjkar predicted.
Yet he cautioned investors against overreacting.
“For the prudent investor, the mantra is simple: do not mistake a geopolitical tremor for a structural collapse. Historically, these ‘black swan’ events create the most attractive entry points for high-quality domestic cyclicals.”
His message: volatility can create opportunity — but selectivity is key.
Sectors in Focus
Kasat indicated that oil marketing companies and paint manufacturers faced pressure due to input cost inflation concerns. Aviation stocks also saw profit-taking amid fears of elevated aviation turbine fuel (ATF) prices. In contrast, upstream energy companies provided some support to indices, tracking stronger crude realizations.
He added that defensive sectors such as FMCG and select pharmaceutical stocks saw relative outperformance as investors sought stability.
Similarly, Bolinjkar pointed out that margin-sensitive sectors such as paints and oil marketing companies face immediate pressure. According to him, every $1 increase in crude typically compresses EBITDA margins by 20–30 basis points.
On the other hand, upstream energy stocks and defence companies stand to benefit structurally. The defence theme is further supported by a record ₹7.85 lakh crore allocation in the Union Budget 2026. Bolinjkar also suggested that IT and pharma could offer tactical safety amid a strengthening dollar.
Technical Levels: Where Does Nifty Stand?
From a technical standpoint, Ajit Mishra, SVP – Research at Religare Broking, noted that the sharp decline has pushed the Nifty close to a critical support zone.
“From a technical perspective, the sharp decline has pushed the Nifty closer to its swing low around the 24,600 level, and a decisive break below this could extend the correction towards the 24,400 mark.”
He added that on any rebound, the 25,000–25,250 zone may act as a strong resistance band. Given elevated volatility and global uncertainty, he advised maintaining a cautious approach, keeping position sizes light and prioritizing disciplined risk management.
What investors should watch now
Three factors will likely determine the market’s next move:
Brent crude trajectory — Sustained levels above $80 could deepen inflation concerns.
Rupee movement — A weaker currency adds pressure to imported inflation.
Geopolitical signals — Any sign of escalation or de-escalation could trigger sharp moves.
While near-term turbulence appears unavoidable, seasoned market observers suggest separating emotional reaction from structural damage.
The war may be far from over — but markets, as history shows, often recover faster than headlines suggest.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
