The Indian stock market experienced a significant downturn on Monday, June 23, 2025, as escalating geopolitical tensions in West Asia, particularly the United States' direct involvement in the Israel-Iran conflict, weighed heavily on investor sentiment. Both the BSE Sensex and NSE Nifty opened lower and extended their losses throughout the morning. The Sensex dipped by over 900 points to trade around 81,599, while the Nifty50 fell over 260 points to 24,846. This sharp decline reflected widespread risk aversion, mirroring weakness across most Asian and global markets. The primary catalyst for this market anxiety was the US bombing of three Iranian nuclear sites over the weekend, which immediately sparked fears of a wider Middle East conflict and a potential closure of the Strait of Hormuz, a critical global energy chokepoint.

The direct consequence of the escalating conflict was a surge in crude oil prices, which briefly hit five-month highs. Brent crude rose to $76.79 a barrel, and WTI crude to $75.26, before paring some gains. This spike in oil prices reignited concerns about inflation and the possibility of delayed interest rate cuts by the US Federal Reserve. While some Fed officials, like Governor Christopher Waller, suggested an early rate cut, the overall cautious stance, particularly from Chair Jerome Powell, leaned towards a September cut, further dampening market sentiment. Gold prices also edged higher due to safe-haven demand, but analysts noted tepid reactions in both gold and crude, suggesting a temporary top unless the conflict escalates significantly, such as Iran blocking the Strait of Hormuz or using nuclear weapons.

Sectorally, all Indian indices traded lower, with Nifty IT and Auto sectors leading the losses, down over 1%. The IT sector's slump was exacerbated by Accenture's Q3 results, which, despite beating revenue estimates, highlighted concerns over declining margins, weak global tech spending, and a muted outlook. Infosys, HCLTech, Wipro, and TCS were among the top IT losers. Conversely, Nifty Media was the sole gainer, showing mild strength. Among individual stocks, Bharat Electronics (BEL), ONGC, Nestle, Bharti Airtel, and Adani Enterprises were top gainers in early trade, while Infosys, Shriram Finance, HUL, Hero MotoCorp, and Bajaj Finance were among the top losers.

Despite the global headwinds, market experts offered nuanced perspectives. Kotak Mahindra Mutual Fund MD Nilesh Shah likened the Indian market to 'a man having average temperature with one leg in cold water and the other in hot water,' suggesting that India's strong economic fundamentals could act as a balancing force against negative global factors. He advised long-term investors to use market corrections as accumulation opportunities, while traders should remain cautious. Similarly, Zee Business Managing Editor Anil Singhvi noted a 'very limited impact' of the US strike on markets, stating that fear is often greater before an attack. He suggested that a significant gap-down opening could present buying opportunities and emphasized the crucial role of the first hour's low as a stop loss for day traders.

Foreign Institutional Investors (FIIs) have been net sellers in Indian equities, offloading nearly ₹1 lakh crore across six key sectors (IT, FMCG, Auto, Consumer Services, Power, Consumer Durables) over the past six months, reflecting concerns over high valuations and global macro uncertainties. However, FIIs turned net buyers on Friday, June 20, with inflows of ₹7,940 crore, while Domestic Institutional Investors (DIIs) booked profits worth ₹3,040 crore. Sectors like Telecom and Financials notably attracted FII inflows amidst this broader de-risking trend. Radhika Gupta, MD & CEO of Edelweiss AMC, advised investors to taper expectations for 2025 as a 'year of returns consolidation' due to global volatility and a subdued period of earnings growth, though a rebound is expected in H2 2025. She recommended flexi and multicap funds for aggressive investors, balanced advantage or aggressive hybrid funds for moderate investors, and tax-efficient fixed income solutions like arbitrage funds for conservative investors.

The Indian market also underwent a significant rebalancing, with Trent and Bharat Electronics (BEL) replacing Nestle India and IndusInd Bank in the BSE Sensex. This reshuffle is expected to trigger over $700 million in passive inflows into Trent and BEL, and substantial outflows from Nestle and IndusInd Bank. The FTSE index rejig also took effect, channeling around $150 million in net inflows into Indian equities, with Vishal Mega Mart, Hyundai Motor India, and Waaree Energies among the beneficiaries. Other corporate news included BEL securing fresh orders worth ₹585 crore, Adani New Industries launching India’s first off-grid 5 MW green hydrogen pilot plant, and Optus reaching a settlement over alleged sales misconduct.

From a technical analysis standpoint, the Nifty 50 has critical intraday supports at 24,840, 24,800, and 24,750. As long as the index sustains above 24,850, a 'buy on dips' strategy remains valid, with resistance seen near 25,350. Om Mehra of SAMCO Securities noted that Nifty has reclaimed both the 9-day and 20-day EMAs, signaling a resumption of the uptrend, with support levels at 25,000 and 24,950, and resistances at 25,225 and 25,280. The Bank Nifty index formed a strong bullish candle, maintaining a positive bias above 55,500, with an expected move towards 56,700 and 57,400. Overall, despite the immediate pressure from geopolitical events, analysts suggest that India's strong domestic fundamentals and the Reserve Bank of India's proactive measures, such as easing provisioning rules for infrastructure loans and liquidity support, may cushion further downside risks, making careful monitoring of global cues and key technical levels essential for investors.