Stock market crash: Indian stock market investors are unable to catch a break. Just when markets were hoping to look up following the trade deal announcement and earnings recovery, the Middle East conflict has cast a fresh pall of gloom.
As the US-Israel-led conflict with Iran entered its second week and oil prices rose to near $120 per barrel, pushing the benchmark indices — Sensex and Nifty 50 — to their worst fall in a month on Monday, March 9.
The high crude oil prices pose a significant risk for India, which is the third-highest oil importer. Sustained increases in oil typically lead to higher inflation, currency pressure, and divergence in sector profitability.
If crude remains elevated for a prolonged period due to tensions involving Iran and the United States, it could create pressure on corporate margins and delay expectations of interest-rate easing, said Santosh Meena, head of research at Swastika Investmart.
Against this backdrop, the Nifty 50 index had tumbled below the 23,700 level while the Sensex crashed 2500 points. The indices managed to recoup some losses by the end of the session, but still ended almost 2% lower.
Sensex ended today’s session at 77,566.16, down 1352.74 points or 1.71%, while the Nifty 50 index ended the day at 24,028.05, down 422.40, or 1.73%.
From a technical perspective, the index slipped below an important short-term support zone, which increases the risk of further downside in the near term, said analysts.
However, Satish Kumar, MD and Head – InCred Research Services, opined that at this stage, he doesn’t see significant downside risk left in equities, if clarity emerges.
“Much of the geopolitical premium is already being priced into commodities and risk assets. If the war does not escalate for extended periods, investors are likely to shift focus back to fundamentals and earnings growth,” opined Kumar.
For now, investors should not react with panic. Corrections are a normal part of any market cycle, especially after strong rallies, said Dr Ravi Singh, Chief Research Officer (Advisory & Research) – Master Capital Services.
“The key thing to watch now is whether Nifty can find support at the next important levels near 23200-22800 and start stabilising. If the index manages to consolidate around these levels and build a base, a recovery could follow once sentiment improves.”
Where could Nifty 50 rise to if US-War conflict resolves?
The outlook for the Nifty 50 will largely depend on how global geopolitical developments and crude oil prices evolve in the coming weeks.
In a bear-case scenario, Nifty may gradually drift toward the 22,000–21,800 range over the medium term, said Meena.
On the other hand, in a bull-case scenario, if geopolitical tensions ease and the Middle East situation stabilises, crude prices could cool down, reducing macroeconomic risks for India, opined experts.
“This would improve global risk appetite and strengthen investor confidence. The Nifty could recover and potentially move back toward the 25,000–25,400 zones, restoring bullish momentum in the market,” said Meena.
Similarly, Singh said that Nifty could regain strength and move back toward the 24,500–25,000 range over the coming months. “Ultimately, the direction of crude prices and geopolitical developments will play a major role in determining the market’s next move,” opined the expert.
He also stressed that for long-term investors, short-term volatility should not be a major concern. As long as the broader economic outlook remains intact, corrections often create better entry opportunities rather than signalling long-term trouble, he added.
Disclaimer: This story is for educational purposes only. 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.
