Indian equities ended lower on Monday, snapping a two-day rally as escalating Iran-US tensions and profit booking weighed on sentiment. According to The Economic Times, Sensex fell over 372 points to close at 76,728 while Nifty 50 declined 110 points to end at 23,946, marking a significant reversal from recent gains. The decline came as fresh escalations in the conflict between Iran and US in the Middle East spooked investors, with diplomatic efforts to end the conflict providing only temporary relief. The market pressure was further intensified by quarterly index rebalancing of several NSE indices taking effect today, adding to the overall selling pressure. Gift Nifty futures around 24,089, at a small discount to the previous close, point to a flat to mildly negative open for the week ahead. However, some analysts remain cautiously optimistic for Nifty going ahead, with market participants closely monitoring the US-Iran negotiations in Qatar, with initial discussions centred on ensuring safe navigation through the Strait of Hormuz.
According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, Nifty formed a shooting star on daily chart, signalling caution near overhead resistance. He noted that weekly pattern is Doji-like, indicating consolidation in a broader sideways range. Amol Athawale, VP Technical Research at Kotak Securities, identified strong support near 50-day SMA around the current levels. Rupak De, Senior Technical Analyst at LKP Securities, had previously noted that the Nifty started the week on a weak note and remained under pressure throughout, as the index slipped below the 50 EMA on the hourly chart. Traders are watching 24,200–24,261 on the upside and 23,800–24,000 as crucial support levels, with options positioning implying a broader 23,700–24,500 band. The technical analyst expects volatility may remain elevated in the very near term due to the NSE monthly expiry on Tuesday. Nagaraj Shetti pointed out that Nifty might see more choppy movements in the near-term before bouncing back again from the lows, with immediate resistance placed at 24,000 level, and rally could continue towards 24,150–24,200 if breached.
Sectorally, defensive sectors such as pharma and healthcare outperformed the broader market, supported by their inelastic demand profile and earnings visibility. According to The Economic Times, selling was broad-based across sectors, with defensive stocks providing some resilience. Among Nifty constituents, Max Healthcare Institute and Dr Reddy's Laboratories were the top gainers, while Kotak Mahindra Bank and Mahindra & Mahindra led the losses. Market breadth remained weak with out of 3,470 stocks that traded on NSE on June 29, 1,330 stocks witnessed advances, 2,036 saw declines while 104 stocks remained unchanged, as reported by The Economic Times. Market breadth was weak on Thursday, with broad indices closing marginally lower, adding to the overall cautious sentiment.
Bank Nifty is near important 57,500–58,500 levels, with HDFC Bank and Kotak Bank expected to drive index moves. According to market analysts, Bank Nifty closed at 58,177.05 on Thursday with a weekly gain of 0.85%, trading above key moving averages. Dr. Ravi Singh, Chief Research Officer at Master Capital Services, noted that options positioning indicates a broader 23,700–24,500 band, with an immediate 23,900–24,300 trading range. Call OI is max at 24,200, then 24,000, signalling strong supply near 24,200 resistance zone, while Put OI is max at 24,000, then 3900, indicating traders defending 24,000 as key support. The domestic market was shut on Friday for Muharram, adding to a long weekend, while June quarter-end and monthly derivatives expiry on Tuesday are seen as near-term catalysts.
Looking ahead, analysts noted that investors remain cautious ahead of the upcoming U.S. nonfarm payrolls data, which could influence the Fed's policy trajectory and either reinforce or temper prevailing expectations of further rate hikes. According to Siddhartha Khemka of Motilal Oswal Financial Services, market participants will closely monitor the US-Iran negotiations in Qatar, with initial discussions centred on ensuring safe navigation through the Strait of Hormuz. He added that until there is greater clarity on the durability of the ceasefire, geopolitical developments are expected to remain a key driver of global sentiment. On the macroeconomic front, investors will monitor India's industrial production data, Eurozone inflation, UK GDP, global PMI readings and the US non-farm payrolls report for further cues on global growth and the Federal Reserve's interest rate trajectory. As per Siddhartha Khemka, developments in West Asia, energy prices, the monsoon and IPO activity are likely to remain the key market drivers in the near term. Global equities show weak tone as US-Iran war escalation keeps investors cautious, while crude oil is falling with lower prices largely factored into domestic valuations.
