Indian equity markets are poised for a cautious start on Tuesday, influenced by ongoing global uncertainties. GIFT Nifty Futures registered a modest gain of 26 points, or 0.11 percent, reaching 23,684, signaling a subdued opening for domestic indices.
Global Market Overview and Influencing Factors
The global economic landscape remains volatile, with persistent geopolitical tensions keeping crude oil prices elevated and exerting pressure on the Indian rupee. While recent diplomatic tones from Washington have marginally eased some tensions, and positive earnings reports from India Inc. have provided some support, the overall market sentiment remains cautious.
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that markets are likely to remain event-driven in the near term. He highlighted that elevated crude oil prices, a continued weakening rupee, rising bond yields, and mounting inflationary concerns collectively create a challenging backdrop for domestic equities.
Asian and US Markets
- Asian Shares: Asian markets showed mixed signals on Tuesday. South Korea's KOSPI dropped over 3.5 percent, while Japan's Nikkei and Hong Kong's Hang Seng posted positive gains, following news of US President Donald Trump pausing a planned attack on Iran.
- US Stocks: US stocks ended mostly lower on Monday as investors engaged in profit-taking. Surging Treasury yields and high oil prices fueled inflation concerns. The Dow Jones Industrial Average rose 0.32 percent, while the S&P 500 and Nasdaq Composite both registered declines.
Commodities and Currency
The US dollar has benefited from safe-haven demand amidst global instability, with the dollar index holding steady at 99.026. Brent crude futures saw a decline of over 2 percent, trading at $109.41 a barrel, partly due to Trump's comments, while US crude fell 1.3 percent to $107.25 per barrel. Spot gold eased marginally to $4,562.50 an ounce.
Ajit Mishra, SVP of Research at Religare Broking, attributed gold's weakness to escalating geopolitical tensions in the Middle East, intensifying concerns over global energy supplies. He recommended a stock-specific approach, favoring sectors like pharma, healthcare, energy, and metals for long positions.
FII-DII Flows
Provisional data from NSE indicates that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks on Monday, offloading shares worth Rs 2,813.69 crore. Conversely, Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 2,682.12 crore into Indian equities.
Technical Outlook for Nifty50, Sensex, and Nifty Bank
Nifty50 and Sensex
Technically, after a gap-down open, the market found support near 23,300/74,200 and rebounded sharply. Shrikant Chouhan, Head of Equity Research at Kotak Securities, suggests a level-based trading strategy for day traders due to the non-directional intraday market texture. A decisive move above 23,650 could trigger a short-term rally towards 24,000, with immediate support at 23,400.
Rupak De, Senior Technical Analyst at LKP Securities, observed continued stock-specific buying interest, indicating selective strength. For day traders, 23,500/75,000 will act as a trend-decider. Above this level, a pullback towards 23,800–23,900/75,500-75,800 is likely. A sustained move below 23,500/75,000 could see a retest of 23,300–23,250/74,200-74,000.
Hitesh Tailor, Technical Research Analyst at Choice Equity Broking, noted that Sensex recovered strongly from the crucial support zone of 74,000–74,250, but continues to face resistance around 75,700–76,000. The India VIX, settling at 19.50, remains a concern for bulls, with a sustained decline below the 18 mark being crucial for regaining bullish momentum. Nilesh Jain, VP and Head of Technical and Derivative research at Centrum Finverse, expects Nifty to trade within a broader range of 23,300–23,800 in the near term.
Nifty Bank
The Nifty Bank formed a bullish candle, signaling consolidation with high volatility. Bajaj Broking highlights that holding above the key support area of 52,700-52,400 could lead to a pullback towards 54,000 and 54,700. For a sustained uptrend, the index needs to form higher highs and higher lows above the breakdown area of 54,400-54,700; otherwise, consolidation within 52,700-54,000 is expected.
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, identified immediate support for Nifty Bank in the 53,100-53,000 zone. A sustained move below this could extend weakness towards 52,700, then 52,400. On the upside, immediate resistance is placed in the 53,900-54,000 zone.