Mumbai, June 23, 2025 — Indian equity markets opened sharply lower on Monday as geopolitical tensions escalated in the Middle East, with the United States officially entering the Israel-Iran conflict through airstrikes on key Iranian nuclear sites.

The BSE Sensex tumbled 705.65 points to 81,702.52 while the Nifty 50 slumped 182.85 points to 24,929.55, falling below the psychological 25,000-mark in early trade. This comes just two sessions after markets had staged a strong rally on Friday.

What Triggered the Market Sell-Off?

The immediate catalyst for the market rout was the U.S. military’s decision to launch bunker-buster airstrikes on three of Iran’s most significant nuclear facilities — Fordow, Natanz, and Isfahan — on Sunday night. The strikes have significantly escalated the Israel-Iran conflict, now entering its 11th day.

The Pentagon confirmed that precision air-to-ground cruise missiles were used and described the operation as “a tactical measure to disable nuclear advancement and deter aggression.”

With Iran vowing retaliation and tensions soaring across the West Asia region, investor sentiment has turned risk-averse globally, with fears of disruption in energy supplies through the Hormuz Strait — the world’s busiest oil chokepoint.

Expert Take: Crisis May Be Short-Term

Despite the geopolitical uncertainty, market experts are cautioning against panic.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented:

“Even though the U.S. bombing of Iran’s three nuclear facilities has worsened the crisis in West Asia, the impact on markets is likely to be limited. The threat of the closure of the Hormuz Strait exists, but it has always been just a threat — it has never actually been closed.”

He added that the market’s volatility is reactionary and driven more by sentiment than fundamentals, suggesting any dip could present buying opportunities for long-term investors.

Top Losers and Sector Impact

Among the 30-Sensex constituents, technology and FMCG stocks led the decline.
Major losers include:

• Infosys: Down 3.6%

• HCL Tech: Down 3.3%

• Hindustan Unilever: Down 2.9%

• Bajaj Finance: Down 2.5%

• Power Grid: Down 2.2%

• Eternal Ltd (recently added to the index): Down 2.1%

Sectors such as IT, FMCG, and financials faced heavy selling, while oil & gas stocks remained relatively resilient due to rising crude oil prices.

Global Markets Mirror Indian Trends

Asian equity markets opened mostly in the red, reacting to the overnight developments:

• South Korea’s Kospi: Down 1.2%

• Japan’s Nikkei 225: Down 0.9%

• Hong Kong’s Hang Seng: Down 1.1%

• Shanghai SSE Composite: Up marginally by 0.2%

U.S. markets had already reflected jitters on Friday, closing largely lower. Analysts expect further volatility when Wall Street opens later today.

Oil Prices Surge on Supply Disruption Fears

With the Middle East tensions rising, Brent crude prices jumped 1.69% to USD 78.31 a barrel, driven by concerns over potential supply disruption. The Hormuz Strait, through which around 20% of global oil passes, is now under heightened risk watch.

Higher crude oil prices could affect India’s trade deficit, inflation trajectory, and currency value, making it a key macro variable to monitor in the coming days.

FIIs Continue Inflows Despite Volatility

Interestingly, Foreign Institutional Investors (FIIs) remained net buyers in Indian equities on Friday, pumping in Rs 7,940.70 crore, according to exchange data.

Market experts believe this shows continued faith in India’s economic fundamentals, and that short-term geopolitical shocks may not deter foreign participation, especially with election season over and policy clarity expected to stabilize.

Last Week’s Rally and Today’s Contrast

The market decline comes in stark contrast to the bullish rally last Friday, when:

• Sensex surged 1,046.30 points or 1.29% to close at 82,408.17

• Nifty jumped 319.15 points or 1.29% to settle at 25,112.40

This positive momentum was driven by strong domestic economic data, recovery in corporate earnings, and upbeat global cues — all of which have now been overshadowed by geopolitical risks.

Key Risk Factors Going Forward

Market analysts have flagged the following potential triggers to watch in the week ahead:

1. Iran’s response to US-Israel action

2. Statements from OPEC or global oil producers on supply stability

3. Further movement in crude oil prices

4. Updates from the RBI on inflation management

5. Clarity on diplomatic efforts between the West and Iran

If the crisis deepens or oil prices spike further, currency depreciation and bond yields may also come under pressure.

Investor Outlook: Hold or Buy the Dip?

While short-term volatility may persist, seasoned investors are advising calm and composure.
Ravi Subramaniam, fund manager at a Mumbai-based mutual fund, said:

“Geopolitical selloffs are sharp but often temporary. Investors should use this time to review their portfolios, avoid panic selling, and look for value in beaten-down quality stocks.”

The broader market is still supported by robust domestic demand, rural consumption recovery, and GST revenue growth, making a sustained downtrend less likely unless the crisis worsens drastically.

Conclusion

The Indian stock markets have been rattled by the sudden escalation of tensions in the Middle East, with the U.S. joining Israel in direct military strikes against Iran, sending shockwaves through global markets.

While Monday’s early trade saw a steep fall, experts urge caution rather than panic, noting that such corrections are opportunities in disguise for long-term investors.

As the geopolitical situation evolves, volatility may remain elevated, and the focus will be on oil prices, diplomatic developments, and central bank responses to inflationary pressures arising from the crisis.

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