Nifty 50 Plummets 1,700 Points Since US-Iran Conflict Escalated: Evaluating Investment Strategies

Market Outlook: Nifty 50 Index Faces Pressure Amid Global Tensions

The Nifty 50 index has lost over 1,700 points since the start of the US-Iran war, despite registering strong gains in three sessions since March 1. The worsening geopolitical backdrop has led to a cautionary sentiment among investors, with US President Donald Trump calling for a coalition to help reopen the Strait of Hormuz and Israel announcing plans for at least three more weeks of war.

Brokerages Citi and Nomura have lowered their targets for the Nifty 50 index for the end of 2026. Citi cut its target to 27,000 from 28,500 and reduced the index's target multiple to 19 times from 20 times one-year forward earnings. Nomura reduced its year-end target to 24,900 from 29,300, implying a potential upside of 7.5%.

Despite the downward revisions, analysts at SAMCO Securities argue that the risk-reward for fresh short positions does not look favorable. They point to the Nifty/Brent crude ratio, which is nearing a long-term support zone. The recent sharp fall in the ratio has been driven largely by the spike in Brent crude prices rather than a total collapse in Nifty.

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Historically, the ratio has rebounded from similar levels, suggesting limited downside from current levels. Additionally, market history suggests that after sharp weekly declines, the market often stabilizes and rebounds in the following weeks. Over the past 15 years, there have been seven previous instances when the Nifty fell more than 5% in a single week, with an average return of 3.4% in the following week.

The probability of positive returns stood at 71% in the one-week, two-week, and four-week periods, while the three-week window recorded positive returns 57% of the time. The latest instance, on March 13, 2026, when the Nifty fell 5.3% for the week, places the market in a setup that looks historically similar.