Following a sharp sell-off in Wednesday's session, investors are closely watching to see if the Sensex and Nifty 50 can stage a recovery on Thursday or if they will extend their recent losses. The Indian stock market was hit by intense selling pressure as renewed tensions between the US and Iran damaged global sentiment and pushed crude oil prices significantly higher.
Market Sell-off and Escalating Pressures
On July 8, the Nifty 50 slipped below critical near-term support levels, ending the day near its low. Similarly, the BSE Sensex recorded a steep decline, reflecting a significant weakening of investor confidence. At the closing bell, the Nifty 50 had fallen 2.12% to settle at 23,882, while the Sensex dropped 2.15% to finish at 76,503.60. Markets came under massive pressure after geopolitical tensions escalated following comments by US President Donald Trump regarding the ceasefire with Iran. This uncertainty triggered a flight to safety and widespread profit booking across various sectors.
Analyst Insights on Global Risks
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, noted that Indian equities are likely to remain volatile in the near term as global risk sentiment has deteriorated. This follows US President Donald Trump's comments on ending the ceasefire with Iran and withdrawing from the Memorandum of Understanding. These developments have significantly heightened geopolitical uncertainty, with the India VIX surging nearly 30% to reach a three-week high.
Khemka added that the spike in geopolitical risks has also lifted crude oil prices. Concerns over global energy supplies have pushed Brent crude above US$79/bbl, a 6.2% increase, which is expected to keep market sentiment fragile until more clarity emerges. Looking ahead, market participants are expected to closely monitor progress between the US and Iran, along with the security of shipping routes, as these factors remain the key drivers for oil prices and overall market sentiment.
Technical Analysis of Nifty and Bank Nifty
According to Bajaj Broking Research, the Nifty formed a strong bearish candlestick pattern with a lower high, a lower low, and a bearish gap, signaling that sellers currently maintain the upper hand. The brokerage noted that the index erased its recent gains after falling below the important support zone around 24,250 and eventually tested the 23,800 mark during intraday trade. Going forward, a breach below the 23,800 support area could open further downside toward the 23,500-23,600 levels, which represent the confluence of the previous gap area and a 61.8% retracement of the previous up-move from 23,070 to 24,530. Staying above 23,800 could lead to consolidation in the 23,800-24,350 range.
Bank Nifty also witnessed strong selling pressure and closed below the crucial 57,000 mark. The index formed a bearish candlestick pattern, indicating it has entered a corrective phase after failing to defend key support levels. Bajaj Broking Research highlighted that the index closed below the immediate 57,000-56,800 support area, signaling a corrective bias. Further weakness could drive the index toward the 55,500-56,000 levels. On the upside, only a move above 58,000 would signal a resumption of the upward trend, as the daily stochastic indicator has generated a sell signal, suggesting that corrective momentum may continue in the short term.
