The recent US-Iran escalation, triggered by targeted airstrikes on key Iranian nuclear facilities, has introduced a fresh layer of geopolitical uncertainty that is rattling global markets. For the Indian stock market, particularly benchmark indices like Nifty 50 and Sensex, this sudden flare-up may bring heightened volatility in the coming sessions.
As investors look for direction, understanding the impact of US-Iran tensions on the Indian stock market, and identifying key levels for Nifty and Sensex, has become more critical than ever.
US-Iran Escalation: Crude Oil Surges, Markets React
The airstrikes carried out by the United States on Iran’s Fordow and Esfahan nuclear sites, allegedly with Israeli cooperation, have sent crude oil prices soaring. Brent crude futures briefly surged near the $80 per barrel mark before moderating slightly. Natural gas prices also saw a spike in response to the developing situation in the Middle East.
Crude oil prices play a pivotal role in shaping the direction of the Indian stock market. India imports over 80% of its oil needs, and any sustained rise in global crude prices puts upward pressure on inflation, weakens the rupee, and widens the current account deficit. This, in turn, negatively affects investor sentiment and market performance.
Indian Stock Market Shows Resilience, But Risks Remain
Despite the geopolitical tension, the Indian stock market showed resilience in the last trading week. The Sensex ended near the 82,400 level while the Nifty 50 closed around the 25,112 mark. The rally was led by banking and financial stocks after the Reserve Bank of India announced relaxed norms for infrastructure financing.
However, experts caution that this resilience may be tested in the short term if tensions between the US and Iran continue to escalate. Investors are advised to watch for global cues and sector-specific impacts, especially in oil-sensitive sectors such as aviation, paint, and FMCG, which could face margin pressure due to rising input costs.
Nifty 50 and Sensex: Key Technical Levels to Watch
Technical analysts are closely monitoring key levels for Nifty and Sensex. For Nifty, support is expected around the 24,700 to 24,400 range. If the index slips below this level, it could trigger further selling and take the index toward 24,000. On the upside, resistance is seen near the 25,200 to 25,300 zone. A breakout above this level may lead to renewed buying interest.
For the Sensex, critical support lies near the 81,300 to 80,800 levels, with resistance pegged around 82,500. If the index crosses this resistance zone with strong volumes, the bullish momentum may continue.
Foreign Institutional Investors Turn Cautious
The US-Iran escalation has triggered a global risk-off sentiment, leading many foreign institutional investors (FIIs) to adopt a cautious stance. FII inflows are often a significant driver of momentum in the Indian stock market, and any slowdown or reversal in foreign fund activity can weigh on valuations.
Although India’s macro fundamentals remain stable, with strong forex reserves and moderate inflation, global investors may choose to stay on the sidelines until geopolitical risks subside. Domestic institutional investors (DIIs) may help cushion some of the impact, but market volatility is likely to remain elevated.
Rupee Weakens Amid Crude Surge
The Indian rupee has also come under pressure due to rising crude oil prices and stronger demand for the US dollar. The rupee recently dipped toward the 83 per dollar mark, prompting speculation about possible intervention by the Reserve Bank of India to curb volatility.
A weakening rupee not only fuels imported inflation but also impacts sectors reliant on foreign inputs, such as electronics and chemicals. Investors should monitor currency movement closely, as it will influence both equity and bond markets.
Short-Term Strategy: Focus on Quality and Defensive Plays
Given the uncertain geopolitical backdrop, analysts suggest that investors adopt a cautious approach in the near term. Any sharp correction in the Nifty or Sensex could offer an opportunity to accumulate quality stocks in defensively positioned sectors like IT, pharma, and FMCG.
Tactical strategies, such as staggered investments and hedging through gold or debt instruments, may also prove beneficial in navigating the volatility. Traders are advised to closely track international developments, crude oil prices, and key support/resistance levels before taking any aggressive positions.
