The Indian stock market slumped on Monday, extending losses for the third consecutive session, as broad-based selling intensified amid escalating concerns over the ongoing US-Iran conflict and its potential impact on the domestic economy.
The Sensex crashed 891.66 points, or 1.15%, to 76,436.53, while the Nifty 50 declined 240.60 points, or 1.00%, to 23,935.55.
The latest sell-off was triggered by the absence of any breakthrough in the US-Iran war, after US President Donald Trump and Iran rejected each other’s recent peace proposals, keeping geopolitical tensions elevated despite efforts to maintain a fragile ceasefire.
Investor sentiment weakened further after Prime Minister Narendra Modi urged citizens to reduce consumption of petrol and diesel, gold, chemical fertilisers and edible oil, while also discouraging non-essential foreign travel.
The appeal was widely interpreted as a crisis-management response aimed at containing the widening current account deficit (CAD) amid elevated crude oil prices caused by the Middle East conflict.
“This call for austerity has slightly negative implication for economic growth in FY27. Particularly, the industries related to the austerity call like petroleum, chemical fertilisers, gold, air travel, hotel and related sectors will be sentimentally impacted. Sectors like pharmaceuticals which will not be impacted in any manner will remain resilient,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
The benchmark Nifty 50 has declined 0.5% over the past one month and has fallen nearly 7.7% in the last three months. Monday’s decline below the crucial 24,000 mark has further weakened near-term sentiment, with broader market breadth also turning negative.
Against this backdrop, concerns are rising over whether the latest wave of selling could drag the Nifty 50 below the 22,000 level.
Can Nifty slip below 22,000?
On the weekly timeframe, the Nifty 50 recently faced strong resistance in the 24,300–24,500 zone, which coincides with the 20-week exponential moving average (EMA) and continues to act as a significant resistance band.
“Following this rejection, Nifty 50 has witnessed renewed downside pressure and has now slipped below the important 100-week EMA support, indicating weakening medium-term momentum. The current price structure reflects a pattern of lower highs, suggesting sellers are becoming increasingly active at higher levels, while volatility is also gradually rising,” said Hitesh Tailor, Technical Research Analyst at Choice Broking.
Shitij Gandhi, AVP – Equity Technical Research at SMC Global Securities, noted that the Nifty 50 has breached key short-term moving averages, while momentum indicators continue to signal downside pressure unless the index quickly reclaims the 24,150 – 24,250 range.
According to Gandhi, a decisive break below 23,500 could accelerate profit booking and open the door for a decline toward the 22,800 – 22,500 zone.
Nifty options data signals caution
From a derivatives perspective, significant Call Open Interest is concentrated around the 24,200–24,500 zone, reinforcing it as a strong resistance band for the current expiry. On the downside, Put writers remain active near the 23,500 and 23,000 strikes, indicating these levels could provide immediate support, Tailor said.
The Put-Call Ratio (PCR) has also softened, reflecting cautious sentiment and defensive positioning among market participants. Unless the Nifty 50 decisively reclaims the 24,200–24,500 range, the index may continue to witness volatile and pressure-driven trading sessions, he added.
“However, despite the ongoing weakness, a fall below 22,000 still appears to be a low-probability extreme bearish scenario rather than the base-case expectation,” Tailor said.
Technically, strong weekly trendline support is placed in the 22,400 – 22,200 zone, followed by the crucial 200-week EMA support near the 22,000 mark, collectively forming a major long-term demand area for the index.
According to Tailor, a decisive breakdown below these levels would likely require stronger negative triggers, including sustained foreign institutional investor (FII) outflows, worsening global risk sentiment, a sharp spike in crude oil prices, or broader macroeconomic deterioration.
“Until then, the broader trend is likely to remain corrective rather than structurally bearish. Any stability near support zones could also trigger short-covering rallies and temporary recovery moves in the coming weeks,” he added.
Gandhi also believes that for the Nifty 50 to test the 22,000 level, a combination of sustained FII selling, weak global cues and elevated India VIX levels would be necessary.
“As of now, 22,000 appears to be a panic-case scenario rather than the base expectation,” he said.
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.
