Markets crashed sharply on Friday with the Sensex plunging nearly 1,500 points and the Nifty below 23,200, extending losses for the third consecutive session. Notably, Sensex fell below 75,000 and Nifty 50 below 23,200 for the first time since April 2025 on Friday.
Despite vague assurances from the US administration, the war in the oil-rich Middle East continued to escalate. Crude oil prices rebounded above the $100-mark as Iran’s new supreme leader warned that the Strait of Hormuz would remain closed to traffic as there was no sign of a resolution to the war between Iran and Israel-US.
The sharp sell-off has reduced the total market capitalization of all BSE-listed companies since the beginning of the month to around Rs. 34 lakh crore has been eroded and Rs. 430 lakh crore has come down.
The Indian rupee weakened to a fresh all-time low after breaching the 92-mark, and FII selling extended declines for the 11th consecutive session.
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What’s next on Monday?
After the massive sell-off, investors are actively awaiting the market’s reaction on Monday. As war continues to escalate in the Middle East, US President Donald Trump said the country may launch additional attacks on Iran’s Kharg Island oil export hub “just for fun”.
The Nifty 50 continued to deviate further from the 200DMA as the sell-off intensified on Friday, said Rupak De, senior technical analyst at LKP Securities. “RSI has entered the oversold zone. Although the trend remains weak, in times of extreme weakness, the market may continue to decline, keeping the RSI in a deep oversold zone,” he added.
According to the analyst, in the short term, the trend may continue to be bearish, with any rise being sold. “On the lower end, the index may decline towards 23000/22800, while on the higher end resistance is placed at 23400,” Dee further said.
Market volatility is expected to persist in the near term as geopolitical tensions in West Asia disrupt the energy sector and lift crude oil prices, while uncertainty around shipping routes through the Strait of Hormuz keeps risk sentiment tenuous, Siddharth Khemka said. He added that any meaningful de-escalation in the conflict involving Iran, Israel and the US could provide relief and support a recovery in equities, while further growth could keep markets under pressure.
“Going forward, market direction is likely to remain sensitive to the West Asian conflict, crude oil price movements and trends in foreign fund flows. Continued foreign inflows and elevated oil prices may keep sentiment cautious, while any signs of easing geopolitical tensions may provide relief to markets,” Khemka said.
According to Bajaj Broking, the Nifty 50 on the weekly chart has formed a major bearish candle with lower highs and lower lows, indicating continuation of the corrective decline. It added that in the process the index slipped to an 11-month low and breached the 100-week EMA and rising trendline to join the CY23 and CY25 lows.
“The index trends lower as it continues to form lower highs and lower lows in the short and medium-term time frames. With key support on the downside to watch out for around 22,700-22,400. The sharp decline has pushed the daily oscillator into oversold territory, but the ASI-300 is below a 14-period low. No clear reversal signal yet.”
According to Vinod Nair, head of research at Geojit Investments, market direction is likely to be dominated by Israel and US conflict with Iran and crude trends, given their knock-on effects on inflation, corporate margins, current account and RBI policy space.
“With cautious buying support from domestic institutions and retail investors, a sustained recovery will require clear signs of geopolitical easing, stability in crude and LPG availability and clarity on sector-specific demand,” the analyst added.
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)
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