Synopsis : Indian markets have shown resilience after an initial shock from the US-Iran conflict, but cracks are beginning to appear. Rising oil prices and global uncertainty continue to keep investors on edge.
India’s benchmark indices—Nifty 50 and BSE Sensex—are once again under pressure, raising a key question for investors: has Dalal Street truly priced in the impact of the ongoing US-Iran conflict?
After initially slipping below the 23,000 mark following the outbreak of tensions, the Nifty 50 staged a strong recovery from 22,500 levels, reclaiming the crucial 24,000 zone. Similarly, the Bank Nifty regained the psychological 56,000 level. However, the recent three-session sell-off has pushed the Nifty back below 24,000, hovering near immediate support levels of 23,800–23,850, signaling renewed caution in the market.
Market experts believe that while the initial shock of the geopolitical crisis has been partially absorbed, the downside risks remain significant—especially if tensions escalate further around key global oil routes like the Strait of Hormuz.
A major concern continues to be rising crude oil prices. With Brent crude trading above $100 per barrel, the pressure on India’s economy is mounting. Higher oil prices widen the current account deficit, weaken the currency, and trigger inflationary risks. The Indian rupee, hovering near ?94.85 per dollar, reflects this growing stress alongside persistent foreign investor outflows.
Despite the volatility, domestic institutional investors (DIIs) have played a stabilizing role. Strong buying by DIIs has offset heavy selling by foreign institutional investors (FIIs), helping markets recover to near pre-crisis levels. However, analysts warn that this recovery may be more “optical” than fundamental, as underlying risks remain largely unpriced.
Valuations have corrected, with the Nifty now trading near 19x earnings—closer to its long-term average of 22x. While this brings the market closer to fair value, it does not yet signal deep-value territory, especially given rising earnings risks tied to energy costs.
Sector-wise, the impact is uneven. Oil-sensitive sectors such as aviation, consumption, and IT are facing pressure, while defensive and commodity-linked sectors are showing relative resilience. This indicates that the market is selectively pricing risk rather than fully factoring in worst-case scenarios.
Technical indicators also suggest caution. Analysts note bearish formations on charts, with key resistance levels at 24,000 for Nifty and 77,000 for Sensex. A sustained move below these levels could trigger further downside, with Nifty potentially slipping toward the 23,500 range.
In essence, while Dalal Street has absorbed the immediate shock, it has not fully discounted a prolonged geopolitical conflict or sustained oil price surge. The market’s next move will largely depend on how global tensions evolve and whether crude prices stabilize.
Until then, volatility and headline-driven swings are likely to dominate investor sentiment.
Disclaimer : This article is for informational purposes only and does not constitute financial or investment advice.
.jpg)
