There has been a significant decline in the Indian stock markets in the last two trading days. Bombay Stock Exchange’s main index Sensex and National Stock Exchange’s main index Nifty have fallen by more than 2.5 percent in just two consecutive sessions. Analysts expect short-term volatility to continue due to the escalating war between Iran and Israel-US and no sign of a diplomatic solution, although the long-term outlook for Indian markets remains strong.
On Monday, there was a big fall in the stock market due to Iran Israel War. Sensex fell by more than 1,000 points and closed below the level of 81,000. Nifty 50 fell more than 300 points and closed below 25,000 points. Due to which stock market investors lost Rs 11 lakh crore in two days. In which a loss of Rs 6.50 lakh crore has been incurred on Monday alone. Tanvi Kanchan, Associate Director of Anand Rathi Share and Stock Brokers, said in the media report that there is going to be ups and downs in the stock market in the coming days.
This is evident from the sharp rise in India VIX, which increased by more than 25 percent to reach the level of 17.13 on Monday. Kanchan said that the sharp increase in VIX shows the habit of avoiding risk. Let us try to understand what kind of shape the stock market may be seen in the coming days.
Will the decline continue further?
Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers, said in an ET report that sharp corrections in the market, no matter how dangerous, have not been able to have a long-term impact. This has been seen before also. He emphasized that India’s domestic macro story remains strong, with net GST collections remaining strong at Rs 1.71 lakh crore in January 2026, earnings recovery expected in FY2027, and quarterly results from PSU banks and metals are also strong.
Vikram Cassat, Head Advisor, PL Capital, said in a media report that despite near-term headwinds, domestic macros remain strong, supported by stable earnings expectations and continued SIP inflows. However, we expect markets to remain headline-driven in the near term, with crude price and geopolitical cues likely to determine sentiment.
Investors will have to take decisions thoughtfully and focus on good balance sheet and earnings visibility. Naval Kagalwala, COO and Head of Product, Shriram Wealth, said in an ET report that market events like escalating hostilities in the Middle East have happened many times before and usually lead to short-term volatility, followed by some stability.
The analyst further said that any correction, if it happens, could help further rationalize valuations in India. The important thing is that this is not just for India. If there is any short-term spillover, it will be mostly through the rise in oil prices and some other segments that are export-import dependent.
Is there any good news for Indian markets?
Kagalwala believes that the recent geopolitical tension may have a positive impact on the Indian markets. The analyst said with multiple global markets being hit simultaneously, capital flows could be revalued, and India could be seen as a safer destination given the strength of its domestic demand.
He further said that participation from domestic investors has been good, liquidity has been on the sidelines which has historically flowed into equities during corrections. The special thing is that while foreign investors sold Indian equities worth Rs 7,536 crore on Friday, domestic investors bought shares worth Rs 12,293 crore during the same period.
What should investors do?
Tanvi Kanchan of Anand Rathi Share & Stock Brokers said in the ET report that this is not the time for panic selling, but a time for discipline. He advised investors to review their portfolios, avoid leveraged positions and use any de-escalation bounce to rebalance into quality large-caps.
He said SIP investors should stick to this path – this is exactly the kind of volatility that leads to long-term wealth creation. Ajit Mishra, SVP of Research at Religare Broking, said that for the short term, investors should be cautious, keep position sizes light and focus on disciplined risk management.