Sensex and Nifty crashed on Monday, as Iran retaliated to Israel-US strikes that killed its supreme leader Ayatollah Ali Khamenei during the weekend. Sensex tumbled over 1,000 points close below the 81,000 level for the first time in over a month. Nifty 50 fell over 300 points, breaching its key support level of 25,000.
The immediate picture is going to remain volatile, said Tanvi Kanchan, Associate Director at Anand Rathi Share & Stock Brokers. This is evident from the sharp surge in India VIX, which surged more than 25% to 17.13 on Monday. Kanchan said that the sharp rise in VIX reflects risk aversion.
“Gold futures rose sharply on MCX as safe-haven demand surged. Elevated crude is a fiscal headache, but RBI has room to manoeuvre, and domestic consumption remains resilient. IT stocks face additional pressure from the Anthropic-driven AI model disruptions rattling US tech sentiment. Banking stocks need to be watched for yield curve dynamics,” the analyst said.
Painful market corrections don’t derail India’s long-term trajectory
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Sharp market corrections, painful as they are, have historically not derailed India’s long-term market trajectory, Kanchan however said. She highlighted that India’s domestic macro story remains strong, with net GST collections remaining robust at Rs 1.71 lakh crore in January 2026, earnings recovery being expected in FY27, along with strong PSU bank and metals quarterly results.
“Despite near-term headwinds, domestic macros remain resilient, supported by steady earnings expectations and sustained SIP inflows,” said Vikram Kasat, Head Advisory at PL Capital. “However, we expect markets to remain headline-driven in the near term, with crude trajectory and geopolitical cues likely to dictate sentiment. Investors should stay selective and focus on quality balance sheets and earnings visibility,” the analyst further said.
Naval Kagalwala, COO & Head of Product at Shriram Wealth, also said that market events, like the rise in hostilities in the Middle East, have occurred multiple times in the past and typically lead to short-term volatility, followed by a period of stabilisation.
“Any correction, if it plays out, could help rationalise valuations further in India, which continues to remain among the fastest-growing major economies. Importantly, this is not an India-specific event. Near-term spillovers, if any, would largely be through a spike in oil prices and certain other segments which rely on exports-imports,” the analyst added.
Any silver lining for the Indian markets?
Kagalwala in fact believes that the recent geopolitical tensions may have a positive impact on Indian markets. “With several global markets impacted simultaneously, capital flows may be re-evaluated, and India could be seen as a relatively safer destination given its domestic demand strength,” the analyst said.
Domestic investor participation has been healthy, with liquidity on the sidelines that has historically tended to come into equities during periods of correction, he further said. Notably, while foreign investors net sold Indian equities worth Rs 7,536 crore on Friday, domestic investors net purchased shares worth Rs 12,293 crore during the same time.
What should investors do?
This is not the time for panic selling, but it is the time for discipline, Tanvi Kanchan from Anand Rathi Share & Stock Brokers said. She advised investors to review their portfolio, avoid leveraged positions, and use any de-escalation bounces to rebalance into quality large-caps.
“SIP investors should stay the course — this is exactly the kind of volatility long-term wealth creation is built through,” she added.
For the short term, investors should maintain a cautious stance, keep position sizes light and focus on disciplined risk management, said Ajit Mishra, SVP of Research at Religare Broking.
Technical levels for the short-term
Nifty has slipped below the rising trendline on the daily timeframe, indicating increasing pessimism in the market, and the RSI remains in a bearish crossover, confirming weak momentum, said Rupak De, Senior Technical Analyst at LKP Securities.
The analyst sees immediate support at 24,600, highlighting that a decisive breakdown below this level can trigger a deeper correction in the market. “On the higher side, resistance is seen at 25,000. Until the Nifty sustains above 25,000, overall sentiment is likely to remain tilted in favor of the bears,” he added.
Bajaj Broking said that immediate bias for Nifty remains down below Monday’s gap down area (25,178-24,989) and pullback should be used as a selling opportunity. “Volatility is likely to remain elevated amid uncertain global cues and escalating geo-political tension. On an immediate basis the index is likely to trade in the range of 24,570-25,178. A follow through weakness below last month’s low (24,571) will open further downside towards 24,400-24,300 levels in the coming sessions being the low of August 2025,” it added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)