Amid the heightening Middle East tensions, Indian equities continued to lose ground. Towards the close of the session today, Sensex was down over 2 per cent pr 1,756.78 points at 82,509.51, while the Nifty was down over 2 per cent at 545 points at 25,251.85.

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"As the situation unfolds, markets could remain volatile and it’s still unclear how global dynamics will change in the coming days," said TRIVESH D, COO, Tradejini.

Santosh Meena, Head of Research, Swastika Investmart on the markets technicals said,  "While the Nifty is currently trading around its 20-day moving average (DMA) of 25,500, there is a possibility of a rebound from these levels. However, selling pressure at higher levels remains a risk. The recent high of 26,277 is likely to act as a near-term resistance, and traders are advised to adopt a "sell on rise" strategy until the Nifty fails to sustain above the 26,000 mark. On the downside, key support levels to watch are 25,100 and 24,800."

For long-term investors, this correction offers a good buying opportunity in large-cap stocks, where valuations have become more attractive. We are observing sectoral rotation, with commodity-related stocks expected to perform well in the near term, she added.

Here are the likely reasons for the market plunge today: 

Rising Middle East tensions:

The attack of Iran on Israel is spiralling the geo-political tensions and global security threats. An Israeli strike on central Beirut’s Bachoura neighborhood early on Thursday left two killed and 11 wounded, the Lebanese health ministry said in a statement.

Crude price rises:

Amid escalating geo-political tensions, crude prices have spiked and ticked higher in Thursday's session. There is also anticipated disruption in crude flow in the wake of the ongoing crisis. Brent crude futures increased 64 cents, or 0.87 per cent, to $74.54 a barrel as of 0006 GMT. U.S. West Texas Intermediate crude futures gained 72 cents, or 1.03 per cent, to $70.82 a barrel.

The higher crude price bodes bad for India Inc. as it results in higher current account deficit for the company.

"However, the situation will change if Israel attacks any oil installations in Iran which will trigger a huge spike in crude. If it happens, it can turn out to be more damaging for oil importers like India. Therefore, investors should watch the emerging situation very closely," Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said.

Also, the higher price will impact inflation and make it difficult for global central banks to aggressively rate cut.

Global markets:

The current geo-political crisis has weighed globally as Hang Seng slumped 3 per cent after continuous run-up after China's massive stimulus. Nonetheless, Japan's Nikkei was up around 2 per cent.

Technicals:

Anand James, Chief Market Strategist, Geojit Financial Services on the Nifty outlook remarked while playing for pull back moves on Monday, we had limited our expectations to 25945. Incidentally, Nifty only had to peek above 25900 inorder to attract bears.

However, we are not convinced yet that the pull back trades are over, and prefer to extend upside expectations to 26150. Alternatively, inability to finish the day above 25970 could signal that the 25600-24600 plunge that we had pencilled in, early in the week, will now get a higher base to launch, he added.