Sensex slips over 200 points, Nifty ends below 25K as Iran-Israel conflict enters day 5; pharma stocks bleed

Mumbai, June 17, 2025 — The Indian equity markets faced a turbulent trading session on Tuesday, as the BSE Sensex slipped 226 points to close at 81,141, while the Nifty 50 dropped 68 points, ending below the critical 25,000 mark at 24,982. The weakness came amid escalating geopolitical tensions in the Middle East, where the Iran-Israel conflict has now entered its fifth day, rattling investor sentiment globally.

Pharmaceutical stocks were among the hardest hit, with the Nifty Pharma index falling over 2.1%, as concerns about disrupted supply chains and global trade routes mounted. Other defensive sectors like FMCG and IT saw mild losses, while energy and metals showed relative resilience.

Geopolitical Tensions Keep Markets on Edge

Investors remained cautious as military operations and retaliatory strikes continued between Iran and Israel, raising fears of a broader regional conflict. Despite calls from the international community for de-escalation, there has been no breakthrough in diplomatic talks so far.

“The prolonged nature of the conflict is starting to weigh heavily on risk assets,” said Ravi Singh, senior market strategist at Avendus Capital. “While global oil prices have surprisingly held steady, the uncertainty is driving a defensive sentiment across Asian markets.”

Brent crude futures were last seen trading at $85.10 per barrel, showing marginal weekly gains. However, the persistent geopolitical overhang has dampened global market confidence, with Asian indices like the Nikkei and Hang Seng also registering declines.

Pharma Stocks Under Pressure

The pharmaceutical sector saw broad-based selling on Tuesday, as investors worried about potential disruptions to raw material imports, especially active pharmaceutical ingredients (APIs) sourced from affected regions or those routed through impacted ports.

Top losers in the pharma pack included:

• Sun Pharma: -3.4%

• Cipla: -2.9%

• Dr. Reddy’s: -2.5%

• Lupin: -2.1%

• Divi’s Labs: -1.8%

“Market is pricing in short-term logistical bottlenecks and possible supply delays for the pharma sector,” noted Amrita Pathak, research head at Edelweiss Wealth. “India’s dependence on external markets for pharmaceutical ingredients makes it vulnerable to global disruptions.”

Broader Market Performance

The market breadth remained weak, with over 1,700 stocks declining on the BSE against 1,100 advancing. The Nifty Midcap 100 fell 0.9%, while the Nifty Smallcap 100 declined 1.2%, showing heightened volatility in the broader markets.

Among sectoral indices:

• Nifty Pharma: -2.1%

• Nifty FMCG: -0.8%

• Nifty IT: -0.5%

• Nifty Metal: +0.4%

• Nifty Energy: +0.7%

Reliance Industries and ONGC lent some support to the indices on the back of firm crude oil prices and expectations of higher refining margins. JSW Steel and Tata Steel also saw buying interest as investors bet on China’s stimulus-led demand rebound.

Rupee and Bond Market Reaction

The Indian rupee weakened marginally to close at ₹83.52 per US dollar, as foreign institutional investors remained net sellers for the third consecutive session. Meanwhile, bond yields remained steady, with the 10-year benchmark yield ending the day at 7.06%, as the Reserve Bank of India refrained from any surprise interventions.

Analysts Expect Volatile Week Ahead

Most analysts agree that until clarity emerges from the Middle East, markets are likely to remain in consolidation mode with a negative bias.

“We are in a fragile zone technically. Nifty has breached the 25,000 support level and could test 24,800 if tensions escalate further,” said Shrikant Chouhan, Head of Technical Research at Kotak Securities. “However, strong institutional support is expected around 24,600-24,700 zones.”

Investors are also awaiting key macro data releases, including US Fed Chair Jerome Powell’s testimony later this week, which could influence the interest rate outlook and market mood globally.

Investor Outlook

Given the elevated volatility, experts recommend a cautious and selective approach to equity investments over the short term. Defensive strategies, such as allocating funds to low-beta stocks and quality dividend-yielding companies, may help limit downside risks.

Long-term investors are advised to stay invested and avoid panic selling. “These geopolitical-driven corrections, while painful, are often short-lived. Unless the situation escalates into a multi-country war, the fundamentals of the Indian economy remain intact,” noted Meera Desai, Fund Manager at ICICI Prudential AMC.

With the Iran-Israel conflict showing no signs of resolution and global uncertainty clouding investor outlook, Indian equity markets are expected to remain volatile in the coming sessions. Pharma stocks may continue to be under pressure, while sector rotation towards energy and metals could offer tactical opportunities.

Investors should monitor global cues closely and stay diversified, keeping a long-term perspective in mind.