How Indian and US Markets Might React to US Strikes on Iran’s Nuclear Sites


A Deep Dive into NIFTY Bank, NIFTY 50, and Their Top Constituents



As reports confirm that the United States has launched targeted airstrikes on Iranian nuclear sites, global markets are entering uncharted waters once again. With geopolitical tensions in the Middle East reaching a critical point, financial markets—especially in the US and India—are bracing for volatility. The market’s trajectory on June 23, 2025, will largely depend on Iran's response or lack thereof.


This comprehensive analysis focuses on the likely short-term reaction of Indian indices (NIFTY 50 and NIFTY Bank) and their top ten constituents, as well as implications for short covering and long unwinding under two distinct scenarios:

  1. Iran does not retaliate, leading to market stabilization.

  2. Iran retaliates, escalating the conflict and triggering a global risk-off sentiment.

Global Context: Geopolitical Tensions and Market Sensitivity

The US military strikes were described by President Donald Trump as a “very successful attack” on three Iranian nuclear facilities. This escalation pushes the ongoing Israel-Iran tensions into a broader confrontation, with the US now fully engaged.

Markets have historically reacted sharply to Middle East escalations. Oil prices often surge on supply concerns, while gold and US treasuries gain as safe havens.

India’s Position:

  • India’s CPI inflation stood at 3.2% in April 2025, indicating manageable price pressures.

  • However, India’s high reliance on oil imports makes its markets sensitive to global oil shocks.

  • As of June 21, Brent crude hovered above $75 per barrel, already pricing in some risk.

Scenario 1: Iran Does Not Retaliate

Market Tone: Relief Rally Expected

A muted response from Iran could be seen as de-escalation. In this scenario, risk appetite may return, oil prices could cool slightly, and both Indian and US markets may see renewed buying.

NIFTY 50

  • Last Close: 24,981.30 (June 20, 2025)

  • Expected Resistance: 25,200–25,400

  • Momentum favors an upside breakout toward 25,400 if no escalation occurs.

NIFTY Bank

  • Last Close: 56,082.56

  • Trading near its 20-day Exponential Moving Average (EMA), the index shows signs of consolidation and potential breakout.

  • Key support at 55,800; a break above 56,200 may trigger strong short covering.

Top 10 NIFTY Bank Constituents – Technical Overview

BankLast Price (INR)TrendResistanceSupport
HDFC Bank1,965.70Bullish (above 21‑day EMA)2,0001,920
ICICI Bank1,427.10Neutral to Bullish1,4501,400
Axis Bank1,279.85Consolidating1,3001,250
Kotak Bank1,861.95Bullish1,9001,830
SBI879.05Strong Bullish900860
IndusInd Bank1,453.25Neutral1,4801,430
Bank of Baroda269.10Consolidating280260
PNB110.21Neutral115108
Federal Bank211.00Mild Strength220205
IDFC First Bank77.50Rangebound8075

Implication: A non-retaliatory stance could push NIFTY Bank up by 1–2%, led by private sector banks like HDFC and ICICI.

Top 10 NIFTY 50 Constituents – Technical Overview

StockLast Price (INR)TrendResistanceSupport
Reliance1,466.20Bullish1,5001,430
HDFC Bank1,965.70Bullish2,0001,920
ICICI Bank1,427.10Neutral to Bullish1,4501,400
Infosys1,876.45Bullish1,9001,850
TCS4,149.90Mild Uptrend4,2004,100
Bharti Airtel1,678.30Strong Bullish1,7001,650
SBI879.05Bullish900860
Eternal (Zomato)278.45Overbought (High PE)290270
Kotak Bank1,861.95Bullish1,9001,830
HUL2,879.15Neutral2,9002,850

Implication: If tensions ease, NIFTY 50 could rally to 25,400, led by financials, telecom, and IT.

US Market Impact – Scenario 1

  • Declining oil prices and reduced geopolitical tensions would bolster a recovery in both the S&P 500 and the Nasdaq.

  • Sectors likely to gain: Tech, Financials, and Consumer Discretionary.

  • Short covering in mega-caps like Apple and Amazon could boost market sentiment.

  • Federal Reserve’s upcoming interest rate guidance could limit any excessive rally.

Scenario 2: Iran Retaliates

Market Tone: Risk-Off Sentiment and Sell-Off

If Iran responds with strikes against US bases in the Gulf, market sentiment would turn risk-averse. Oil could surge beyond $90–$120 per barrel, causing inflation fears, potential rate hike concerns, and volatility spikes.

NIFTY 50

  • Possible Downside: 24,600–24,400

  • Momentum may turn bearish, especially in oil-sensitive and rate-sensitive sectors.

NIFTY Bank

  • Downside Target: 54,500–54,000

  • Selling pressure would likely accelerate across PSU and private banks due to inflation risks.

NIFTY Bank Constituents – Risk Case Summary

  • HDFC Bank: Long unwinding below ₹1,920

  • ICICI Bank: Support at ₹1,400 may break

  • Axis Bank: Below ₹1,250 turns bearish

  • Kotak Bank: At risk below ₹1,830

  • SBI: May test ₹860

  • Bank of Baroda, PNB: Vulnerable to oil-induced shocks

  • Overall Decline: Estimated 2–3%, with PSU banks underperforming

NIFTY 50 Constituents – Risk Case Summary

  • Reliance: Could test ₹1,430

  • IT stocks (Infosys, TCS): May hold better, but INR volatility is a risk

  • Bharti Airtel: Support at ₹1,650 critical

  • Eternal (Zomato): High PE could lead to rapid correction

  • HUL: Defensive buying may support prices

Estimated Correction: 3–5% on NIFTY 50 if oil spikes and global cues remain negative.

US Market Impact – Scenario 2

  • A retaliatory strike could cause a sharp drop in the Dow Jones (600+ points).

  • Airlines, oil consumers, and travel stocks would likely fall.

  • Gold, defense, and oil producers may outperform.

  • Long unwinding in growth sectors could accelerate, especially with interest rate uncertainty ahead.

Conclusion

The direction of financial markets on June 23, 2025, hinges on Iran's response.

  • No Retaliation: Relief rally likely.

    • NIFTY 50 may approach 25,400.

    • NIFTY Bank could rise above 56,500.

    • Short covering in financials and telecom is expected.

  • Retaliation: Escalation triggers a risk-off wave.

    • NIFTY 50 may slide to 24,400.

    • NIFTY Bank could test 54,000.

    • Long unwinding would dominate.

Investors should monitor key variables like crude oil prices, India VIX (currently at 13.67), and US bond yields. A hedged or sector-specific strategy is advised during such uncertain times.

Author’s Note:

This article is based on current geopolitical developments, technical market indicators, and publicly available price data from the National Stock Exchange of India, BSE India, and financial portals such as Moneycontrol and TradingView. The analysis presents a forward-looking scenario and is intended purely for informational purposes.

Sources:

Disclaimer: This article is not investment advice. Market reactions are subject to volatility, and investor discretion is strongly advised.

Location: Mumbai, Maharashtra, India
Welcome to The Financial and Tech Literacy! I’m Awdhesh Kumar, a finance and tech enthusiast with 20+ years of experience in accounts, taxation, and the stock market. This blog simplifies finance and digital topics for all—students, professionals, retirees, and new investors. Learn about stock market strategies, personal finance, mutual funds, tech tools, digital banking, and government schemes. All content is original, practical, and based on real experience—no paid promotions or clickbait. We refer to trusted sources like SEBI, RBI, NSE, and Economic Times. Stay updated, make informed decisions, and grow financially with us. For contact: awdheshdube65@gmail.com.

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