Nifty’s 25,000 test is here: US-Israel strikes on Iran, oil spike fears put Dalal Street on edge

Indian equities entered the weekend on a fragile note after Nifty shed 1.25% on February 27 to settle at 25,178.65, extending a pattern of lower highs and lower lows that has been visible since mid-February.

• Nifty 50 faces selling pressure after US-Israel strikes on Iran
• Crude oil surge and Middle East tensions threaten Indian equities
• Key Nifty support at 25,000; further drop may target 24,600

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The Nifty 50 index is likely under intensified selling pressure with US-Israel strikes on Iran taking place over the weekend, which claimed the life of Supreme Leader Ayatollah Ali Khamenei. Iran’s subsequent missile retaliation against Israeli and US targets in the Gulf have dramatically raised the stakes for global energy markets.

Indian equities entered the weekend on a fragile note after Nifty shed 1.25% on February 27 to settle at 25,178.65, extending a pattern of lower highs and lower lows that has been visible since mid-February. The decline came against a backdrop of persistent selling in IT and rate-sensitive sectors, inconsistent foreign institutional investor flows, and mounting worries over Middle East tensions even before the latest military actions.

With crude oil already trading at multi-month highs and the Strait of Hormuz under threat, the benchmark index (closing at 25,178.65 on Friday amid an ongoing corrective phase) now confronts a potent mix of geopolitical uncertainty, inflation fears, and risk aversion that could push it toward the critical 25,000 psychological level and beyond.

Market analysts are now assessing how severely the oil shock will feed through to Indian equities.

The corrective tone had already taken hold, as noted by Ajit Mishra, SVP – Research, Religare Broking, with Nifty surrendering the 25,400 support and drifting toward the 25,100 gap area as per Friday.

“It will be important to see how the relatively stronger sectors, especially banking, behave in the coming sessions, as that could determine whether the market witnesses a rebound or extends the decline towards the 24,800 zone,” he said.

During February, we witnessed wild, two-sided volatility driven by high-impact events, such as the Budget and the India-US trade deal announcement on February 3, added Vipin Kumar, AVP Equity Research and PMS, Global Capital Market.

"The broader chart structure remains negative; this underlying weakness makes it difficult for the Nifty index to sustain higher levels. On Monday, we expect a knee-jerk reaction across global equity markets as the Middle East enters a state of war. A sustained break below the 25,000 spot level could drag the index toward 24,600, which serves as crucial technical support," he explained.

Nilesh Jain, VP – Head of Technical and Derivative Research, Centrum Finverse, added, “The Nifty slipped below its crucial 200-DMA placed at 25,350, which is now expected to act as an immediate resistance zone. The index continues to exhibit a lower top and lower bottom formation on the daily chart, reflecting a weakening trend. The key psychological support is now seen at the 25,000 mark, and the overall structure points toward continued weakness, with pullbacks likely to face selling pressure.”

Brent crude, which closed Friday near $72 to 73 per barrel after a sharp intraday rally, is expected to open significantly higher when global markets resume trading Sunday night, with analysts warning of an immediate war premium that could drive prices toward $80 or even $83 to $95 if disruptions to the Strait of Hormuz persist.

For India, which imports roughly 50% of its crude through this vital chokepoint, the implications are immediate: higher import bills, current account deficit widening, rupee depreciation risk, and renewed inflationary pressure.

Technical charts paint a bearish picture that the fresh geopolitical shock is likely to reinforce.

The index has decisively broken below its 200-day moving average (around 25,350), which now serves as near-term resistance. Momentum indicators, including RSI and MACD, remain in sell mode, while Friday’s session produced a large bearish candle on above-average volume.

Key support is clustered in the 25,100 to 25,000 zone — home to significant put open interest and a psychological floor. A decisive close below this band would open the path toward 24,800 or even the Budget-day low near 24,571, according to multiple technical analysts. On any bounce, resistance is expected at 25,350–25,500 initially, followed by the tougher 25,600–25,650 barrier.

India VIX, already climbing back above key moving averages to around 13.7 on Friday, is likely to surge further as geopolitical shocks historically push volatility 20 to 40% higher in short order.

Bank Nifty, which has shown relative resilience compared with the broader market, closed at 60,529. Its performance will remain pivotal: holding above the 60,300 to 59,900 support band could limit downside in the benchmark, while a breakdown would accelerate broader weakness.

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