Sensex Sinks 860 Points, Nifty Slips Below 24,650 Amid Israel-Iran Tensions

Friday, June 13th: Indian equity markets experienced a significant downturn on Thursday, marking their second consecutive session of sharp losses. At around 10:30 A.M, the Sensex was down 862.49, or 1.06%, and was trading at 80,829.49, while the Nifty was down 260.35, or 1.05%, and was trading at 24,627.85.

One of the key reasons for benchmark indices dipping is the escalating geopolitical tensions in the Middle East, triggered by a pre-dawn Israeli airstrike on Iran’s capital, rattling investor sentiment and leading to a broad market sell-off.

Key Market Highlights (At Around 10:30 A.M on June 13th)

• Sensex plunged 862 points, trading at 80,829.49
• Nifty fell below the 24,650 mark, down 260.35 points at 24,627.85
• India VIX spiked 1.30% to 15.53, signalling rising volatility
• Crude oil prices surged 10%, with weekly gains nearing 14% — the highest since 2022
• PSU Bank, Smallcap 100, and Nifty Auto led sectoral losses, down 1.60%, 1.53%, and 1.49% respectively

Broader Market Sentiment Weakens

The fallout from the Israel-Iran conflict extended beyond equities. The Indian rupee emerged as the worst-performing Asian currency of the day, significantly depreciating due to the surge in oil prices and a global shift towards risk aversion.

Investor concerns were further compounded by a tragic Air India crash near Ahmedabad and the ongoing threat of potential unilateral tariff hikes by the US on major trade partners. A decision on these tariffs is expected in the coming weeks, adding another layer of uncertainty to the global economic outlook.

Sectoral Overview

Selling pressure was broad-based:

• Nifty Bank, IT, Metal, and Consumer Durables each lost over 1%, indicating widespread profit booking and risk aversion in these key sectors.
• Nifty Energy, FMCG, Infra, Pharma, and Realty showed relatively mild resilience, remaining largely flat.
• Aviation stocks, including IndiGo and SpiceJet, took a significant hit, dropping up to 4% in reaction to the Air India crash and the increasing burden of higher crude oil prices on their operational costs.

Nifty’s Technical Aspect

• Technically, the Nifty faced stiff resistance near the 25,200 zone and has now slipped below its 9-day Exponential Moving Average (EMA).
• While it continues to hover around the 20-day Simple Moving Average (SMA), the formation of a bearish engulfing pattern suggests a potential reversal of the recent uptrend or at least a period of consolidation and profit booking. A bearish engulfing pattern occurs when a large bearish (red) candlestick completely “engulfs” a smaller bullish (green) candlestick, indicating strong selling pressure.
• The immediate support level for the Nifty is at 24,800, while the resistance level is at 25,100.
• The Relative Strength Index (RSI) dropped from 60 to 55, indicating weakening momentum.
• The Average True Range (ATR) ticked up, suggesting an increase in expected intraday price swings.

Stock Movers

• ONGC was the only gainer on the Nifty
• Major laggards included L&T, Shriram Finance, Tech Mahindra, NTPC, and Bajaj Finserv

Future Outlook

With tensions escalating in the Middle East and crude oil prices surging to multi-month highs, market volatility is expected to remain significantly elevated. Investors are advised to maintain a cautious approach and closely monitor geopolitical developments and global policy shifts, as these factors are likely to continue dictating market direction in the near term.

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations