Stock Market Next Week: Will Nifty50 Rebound Or Fall Further Amid Iran-Israel Tensions And Fed Signals?

Stock markets across the globe, including India, faced intense selling pressure on Friday following a major geopolitical development—Israel's launch of airstrikes on Iran. This marked a significant escalation in tensions, rattling investor confidence and spiking demand for safe-haven assets.

On friday, the BSE Sensex fell over 1,000 points intraday before recovering to close at 81,118.60, down 573.38 points or 0.70%. The Nifty 50 mirrored the trend, ending at 24,718.60, down 169.60 points or 0.68%.

Stocks such as Adani Ports, Titan, Power Grid, Tata Steel, Mahindra and Mahindra, HDFC Bank, and ICICI Bank fell between 3-5% over the past week, reflecting broad-based weakness.
Meanwhile, US indices also suffered sharp declines. The Dow Jones Industrial Average plunged 769.83 points (1.79%), the S&P 500 lost 1.13%, and the Nasdaq Composite dropped 1.30%. Investor favourites like Nvidia tumbled, while oil and defence stocks gained as risk appetite waned.

Market Sentiment and Geopolitical Volatility
“The Indian equity markets are poised for a week of significant volatility and directional uncertainty. Geopolitical tensions in the Middle East will clash with potentially supportive global monetary policy signals and easing trade tensions,” said Sugandha Sachdeva, Founder, SS WealthStreet

“As the Iran–Israel conflict unfolds, global markets have entered a risk-off mode. Investors are responding to fears of broader geopolitical escalation across the Middle East. Volatility is expected to remain elevated in the short term, with sentiment driven largely by geopolitical headlines,” Sudeep Shah, Deputy VP & Head of Technical & Derivatives Research, SBI Securities

Crude Oil and Inflation Worries
Brent crude surged over 11% last week, its sharpest rally since April 2024. Prices neared $74 per barrel, raising inflationary concerns globally.
“Crude oil prices have already surged by 13% last week to close at $73.198 per barrel. Any further intensification of the conflict raises concerns about potential supply disruptions from the critical Middle East region. Higher crude prices are likely to impact oil marketing companies, paint, cement, transportation, and logistics sectors,” added Sachdeva

Shah said that the crude oil prices have surged above its 200-day EMA level for the first time after January 2025, raising concerns about inflation and supply disruptions.

Impact of the US Fed and Dollar Index
The US Federal Reserve’s meeting on June 18 could provide some relief. The dollar index has recently slipped to a near three-year low, which is a positive for emerging markets like India.

“Market participants would also closely eye the outcome of key US Fed meeting on June 18th. With signs of cooling inflation in the US economy and the limited initial impact of tariffs, there's growing expectation that the US central bank might signal a more dovish stance or even hint at potential rate cuts later this year. Such a hint, or even a nuanced shift in language, would be a major positive for global equity markets, including India, by improving liquidity sentiment,” said Sachdeva
 

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Technical Outlook: Key Support Zones in Focus
Shah noted that in the early part of last week, Nifty hovered near its 8-month high within a tight range. The sell-off intensified after Israel’s airstrike on Iran, triggering a sharp gap-down opening in Indian markets.

Despite the carnage, Nifty found support in the 24,500–24,450 zone and rebounded sharply—recovering over 240 points intraday.
Yet, he remains cautious: “The index still trades below its 20-day EMA, and RSI remains directionless. The market is in 'no-man’s land,' caught between support and resistance zones.”

Key Levels to Watch:
Support: 24,500–24,450. A break below could drag the index to 24,200 or even 23,950.
Resistance: 24,850–24,900. A close above 24,900 could set the stage for a rally to 25,500.

‘Technical setup indicates that 24,400-24, 500 is a crucial support zone for the benchmark index -Nifty and as long as this holds, recovery is likely towards 25,000 mark, driven by buying activity once initial geopolitical shock subsides or positive global cues emerge. On the flip side, a decisive breakdown below the 24,400 mark would be a significant bearish signal. This could trigger further aggressive selling, pushing the Nifty lower towards the 23,950 mark,’ said Sachdeva.

Bank Nifty: Caution After Record High
Bank Nifty, which hit a fresh all-time high of 57,049 last week, has begun showing signs of weakness.

"A Bearish Engulfing pattern on the weekly chart and a slip below the 20-day EMA are early warning signs," Shah explained. "The daily RSI is trending lower, indicating limited upside potential."

Bank Nifty Levels:
Support: 55,100–55,000. Breaching 55,000 could lead to further downside towards 54,400.
Resistance: 55,700–55,800. Sustained trade above this zone could turn the tide bullish again

Sectoral Outlook: Winners and Losers
Potential Outperformers
IT Sector: Nifty IT has outpaced the broader market, with its ratio chart breaking out of a consolidation phase. It is now hovering near its 200-day EMA with a bullish RSI. Stocks like HCL Tech and Tech Mahindra are technically strong, as per Shah.

Pharma and Healthcare: These sectors are also showing relative strength, aided by defensive demand in uncertain times.

Sectors Under Pressure
If the Iran–Israel conflict escalates, the following sectors may face headwinds:
Oil Marketing Companies (IOC, BPCL, HPCL): Margin squeeze due to crude spike.
Airlines and Logistics: Rising fuel costs will hurt profitability.
Auto and FMCG: Higher transportation and input costs could dampen demand.
Cement and Infrastructure: Energy-intensive sectors may face margin compression.

Defence Sector: A Surprise Beneficiary
As geopolitical risks rise, the defence sector could benefit from increased government spending on national security. Stocks in this space, such as Lockheed Martin and RTX, surged over 3% in the U.S. last week, as per Shah.

Key Stocks to Watch
According to Shah: Max Health, HCL Tech, Tech Mahindra, Glenmark, 360 One Wealth, and Supreme Industries are showing bullish setups and could outperform in the coming week.

Stay Nimble and Watch Global Cues
With the Iran–Israel conflict casting a long shadow, crude oil volatility, Fed rate signals, and technical support levels will guide the Indian stock market’s trajectory in the upcoming week.
Experts advise a cautious approach. "Until clarity emerges, markets are likely to remain nervous and defensive," said Shah.

Experts recommend sticking to domestic demand-led sectors and safe havens like IT and Pharma, while watching the June 18 Fed decision for directional clarity.

Disclaimer

The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds