Sensex, Nifty tumble nearly 1.5%: Trump's possible action against Iran leaving markets jittery, say analysts

Markets

• Sensex and Nifty fell sharply, breaching key support levels.
• Analysts attribute the drop to profit booking, not a trend reversal.
• Geopolitical tensions and oil prices add to short-term caution.

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Indian stock markets plunged on February 19, with benchmark indices Sensex and Nifty breaching key support levels in afternoon trading hours. Analysts have commented on whether this is just a result of minor profit-booking after three days of gains, or a trend reversal at play.

Sensex declined nearly 1,236.11 points (1.48 percent) to close at 82,498.14, while Nifty 50 fell around 365 points (1.41 percent) to end the session at 25,454.35. All major indices closed in the red, with IndiGo, Mahindra & Mahindra and UltraTech Cement shares leading losses on the benchmark indices.

Profit booking or trend reversal?

A drastic fall after three days of advances may indicate profit booking in the short term rather than a reversal of the trend, said Pranav Koomar, Founder and CEO of PlusCash. He said that markets do have cycles of oscillations, and occasional corrections are a normal function of profit-taking.

However, the extent and universality of the current correction, particularly if the leaders are participating, indicate that traders are reevaluating markets and risk profiles, he added.

Tushar Badjate, Director of Badjate Stock & Shares Pvt Ltd, also said that the current wave of negativity in the markets does not appear to signal a long-term trend reversal, but reflects profit booking after a strong rally. “When markets rise sharply over a period of time, it is natural for investors to lock in gains and rebalance their portfolios. Such phases of consolidation are healthy — they help cool off stretched valuations and create a stronger base for the next move upward,” the analyst added.

The analyst explained that geopolitical overhang is adding to this temporary caution. “The United States has indicated the possibility of military action against Iran, which has raised concerns about stability in the Middle East. This region is critical to global oil supplies, particularly through the Strait of Hormuz, a key transit route for crude exports. Any disruption there could push oil prices higher, increase inflationary pressures globally, and impact market sentiment in the short term,” he explained.

That said, markets often react sharply to headlines but stabilize once clarity emerges. Unless tensions escalate into a prolonged conflict that materially disrupts oil supply or global growth, the broader fundamentals remain intact, said Badjate.

“Corporate earnings, economic resilience, and liquidity conditions continue to support the medium- to long-term outlook. In essence, what we are witnessing seems more like a pause in momentum rather than a structural shift in direction,” he added.

“In the short run, we can expect a range-bound market with high volatility. For a reversal in the trend, we need a decline below critical technical levels and weakening macro fundamentals,” according to Koomar.

Key levels to watch out for:

Drumil Vithlani, Technical Analyst at Bonanza, said markets are are witnessing some profit booking after three consecutive sessions of gains, but this does not yet signal a confirmed trend reversal. According to him, Nifty continues to hold above the crucial 25,150–25,200 support zone, which remains the key level to watch.

“Momentum indicators like RSI have recovered from oversold territory and are hovering near neutral levels, suggesting consolidation rather than fresh weakness,” he said.

As long as the index sustains above 25,150, the broader recovery structure remains intact with potential to retest 26,000–26,200, according to Vithlani. “However, a decisive break below support could trigger renewed selling pressure and open the door towards 24,800 in the near term,” he said.

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