Indian equity markets began the week on a nervous note, reflecting the global anxiety sparked by a major geopolitical development over the weekend. The United States launched targeted airstrikes on Iranian nuclear facilities, escalating tensions in the Middle East and triggering a classic risk-off reaction across world markets.
After closing last week on a high, with the Nifty reclaiming and sustaining above the 25,100 mark, today’s session has seen a sharp reversal. The market opened with a significant gap-down, tracking weak global cues, and selling has only intensified as the day progressed.
Nifty Reacts Sharply to Global Shock
The Nifty opened over 150 points lower and has remained under pressure throughout the morning. At the time of writing, the index is down around 231 points and is trading near 24,880. It briefly touched an intraday low of 24,824.65, with a high of just 24,988.10, indicating a narrow but volatile range so far.
This pullback comes despite a structurally strong setup from the previous week. The market’s reaction highlights just how sensitive sentiment remains to sudden geopolitical events, especially when they carry the risk of disrupting oil prices, global growth, and capital flows.
Bank Nifty Slips After Brief Outperformance
The Bank Nifty, which outperformed broader indices last week thanks to the Reserve Bank of India’s relaxed lending norms for infrastructure NBFCs, has also given up ground today. It is currently down over 300 points and is hovering around the 55,900 mark.
This decline indicates that financials, though supported by policy tailwinds, are not insulated from global shocks – particularly when such events can influence currency volatility, inflation expectations, and fund flows.
What’s Weighing on Sentiment?
The sharp decline is directly linked to the geopolitical unrest stemming from the U.S.-Iran conflict. Over the weekend, the U.S. carried out airstrikes targeting Iranian nuclear infrastructure, prompting the United Nations Security Council to convene an emergency session. Global markets opened on the back foot, with Dow Futures down over 200 points and Asian markets trading lower by 0.5 to 1 percent. Gift Nifty had already hinted at a weak start for Indian equities, showing a cut of over 100 points ahead of the open.
In such high-stakes environments, equity markets tend to react swiftly and defensively, particularly when the events in question have potential implications for energy prices and geopolitical stability.
Institutional Flow Dynamics
Interestingly, Friday’s market action told a different story. Foreign Institutional Investors (FIIs) were aggressive net buyers, pumping in ₹7,941 crore into Indian equities. This was largely driven by rebalancing flows linked to the FTSE and Sensex indices. On the other side, Domestic Institutional Investors (DIIs) booked profits, selling ₹3,050 crore worth of shares.
This divergence between foreign and domestic flows underscores the unique position of Indian markets right now: strong fundamentals and a long-term growth story continue to attract global capital, even as near-term uncertainties cause local participants to turn risk-averse.
Caution in the Derivatives Segment
The derivatives market is also showing signs of heightened caution. FIIs sold ₹22,365 crore worth of index options while adding 1.7 lakh contracts of short puts. The Put-Call Ratio (PCR) stands at 1.16 – a fairly neutral reading but leaning slightly bearish. Meanwhile, FII long exposure in index futures has ticked up marginally to 24 percent from 22 percent the previous session.
These figures suggest that institutional traders are defending the 24,800 – 24,900 zone while preparing for more downside hedging if required.
Safe Havens on the Rise
As expected, investors are reallocating capital to safer asset classes. Gold prices have surged to $3,360 an ounce, moving closer to record highs. Silver is also rallying, currently trading around ₹1,06,224 per kilogram. Brent Crude has jumped over 1.5 percent and is now at $78.36 per barrel, reflecting fears of supply disruption due to tensions in the Middle East. The Dollar Index has softened slightly, now hovering near 98.98.
These moves are not just numbers – they will likely feed back into Indian sectoral dynamics, impacting oil marketing companies, metal stocks, jewellery exporters, and even select IT names sensitive to currency swings.
What Traders Should Focus on This Week
With monthly expiry scheduled for Thursday and fresh geopolitical risk clouding the outlook, traders need to adopt a defensive, disciplined approach. Nifty’s support around 24,800 is already being tested intraday, and if this level doesn’t hold, it could lead to deeper cuts. Bank Nifty’s trajectory will also be critical to watch, especially given its recent leadership.
Expect intraday volatility to remain high. The India VIX is likely to spike further if tension escalates, and traders are advised to tighten stop-losses, avoid over-leveraging, and stay nimble in execution.
In Conclusion
The Indian markets have entered the new week with uncertainty in the air. Last week’s strength, backed by structural flows and domestic policy support, has quickly given way to fear-driven trading triggered by geopolitical flashpoints. While the long-term story for India remains intact, this week is clearly about short-term risk management.
Disclaimer:
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