Indian equity benchmarks extended their losing streak for a fourth straight session on Monday amid renewed geopolitical concerns. The 30-share BSE Sensex pack dropped 508.40 points or 0.68 per cent to close at 74,267.34, while the NSE Nifty50 index declined 165.15 points or 0.70 per cent to settle at 23,382.60.

The weakness was more pronounced in the broader market, where Nifty Midcap100 fell 1.45 per cent and Nifty Smallcap100 slipped 0.88 per cent.

Vinod Nair, Head of Research at Geojit Investments, said, "Recent US strikes and the escalation in cross-border hostilities between Israel and Lebanon have exerted selling pressure on equity markets, reflecting heightened geopolitical uncertainty and a shift towards risk-off sentiment. However, as the conflict has now entered its fourth month, participants are increasingly anticipating a potential diplomatic progress in the near term."

He added, "The resumption of India–US trade negotiations, with a focus on an interim trade agreement, could act as a supportive trigger for market sentiment going forward. The Nifty Mid and Smallcap underperformed, as investors moved towards relatively better-valued opportunities in large-cap equities, seeking stability amid global uncertainties."

According to Nair, upcoming Reserve Bank of India (RBI) policy decisions and GDP data releases will be key domestic triggers for the market.

Ponmudi R, CEO of Enrich Money, said geopolitical tensions, energy prices and uncertainty around global trade routes continued to keep volatility high.

"Escalating tensions in the Middle East, elevated energy prices and continued uncertainty surrounding global trade routes are keeping volatility elevated and investor positioning defensive. Until there is credible progress on the diplomatic front and a meaningful easing of supply concerns through the reopening of the Strait of Hormuz, the market is likely to remain highly sensitive to geopolitical developments," he said.

"In the near term, risk sentiment is expected to remain fragile, with macroeconomic and geopolitical headlines continuing to exert a greater influence on market direction than underlying fundamentals," Ponmudi added.

Sectorally, most major sub-indices ended in the red, although information technology (IT) stocks bucked the trend and outperformed the market.

"IT remained the notable exception, extending gains of more than 2.5 per cent, supported by continued strength in global technology stocks, AI-related optimism and selective value buying. The sector's resilience helped cushion some of the broader market weakness but was insufficient to offset widespread selling elsewhere," Ponmudi said.

Nifty outlook

Rupak De, Senior Technical Analyst at LKP Securities, said the benchmark index remains under pressure after failing to sustain higher levels.

"Overall, sentiment is likely to remain bearish. In the short term, the index may drift towards 23,200 level. On the upside, immediate resistance is placed around 23,500," he stated.