Indian equity markets are expected to open on a positive note this Monday, signaled by a 74-point, or 0.30 percent, rise in GIFT Nifty Futures to 24,360 on the NSE International Exchange. This comes despite persistent geopolitical tensions in West Asia and elevated crude oil prices, which continue to temper risk appetite globally.
Global Cues and Market Influences
US stocks closed higher on Friday, influenced by fluctuating government bond yields and ongoing uncertainties in the Middle East. However, Asian markets remained largely flat this Monday, with oil prices easing as investors await details of new US sanctions against Iran. The Dow Jones Industrial Average gained 0.98 percent, the S&P 500 rose 0.43 percent, and the Nasdaq Composite added 0.44 percent.
Crude oil prices saw a slight dip ahead of the anticipated US sanctions, with Brent crude falling 1 percent to $93.43 and US crude easing 1.1 percent to $86.14 a barrel. Gold, however, firmed 0.4 percent to $4,623 an ounce, having climbed 14 percent in August.
Market volatility is expected to continue in the near term due to geopolitical uncertainty, high crude oil prices, and global bond yields, according to Ajit Mishra, SVP of Research at Religare Broking. He advises traders to avoid aggressive price chasing and instead accumulate fundamentally strong companies during declines.
FII-DII Investment Trends
Provisional data from the NSE revealed that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks on Friday, offloading Rs 542.71 crore. Conversely, Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 2,124.14 crore into Indian equities. Despite Friday's selling, FPIs have shown significant buying interest in August, infusing Rs 23,544 crore so far, driven by improving earnings and a stable rupee.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that FPIs are not primarily targeting attractively valued large banking or IT stocks. He anticipates FPI buying to persist given India’s improving GDP and earnings growth outlook, though high US bond yields remain a potential headwind for equities.
Nifty50, Sensex, and India VIX Outlook
The short-term market outlook for the Nifty50 remains cautious. However, the 50-day Simple Moving Average (SMA) is identified as a critical support zone. Amol Athawale, VP of Technical Research at Kotak Securities, suggests that a pullback formation is likely as long as the market trades above this level. On the upside, Nifty could rebound towards the 20-day SMA, around 24,400. A breakout above 24,400 could push the index towards the 24,500-24,700 range. Conversely, a fall below 24,150 could accelerate selling pressure, retesting 24,000.
For the Sensex, Hitesh Tailor, Technical Research Analyst at Choice Equity Broking, indicates that it trades near its 50-Day EMA but below the 200-Day EMA, maintaining a cautious broader trend. Immediate support for Sensex is between 77,000–77,380, with key resistance at 77,720–78,000.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, observed a small negative candle with a long lower shadow on Nifty's weekly chart, hinting at a bullish hammer-type pattern. He projects potential upside towards 24,500-24,600 next week, with immediate support at 24,100. India VIX remains historically low at 11.20, suggesting stable trading conditions unless key technical levels are breached.
Nifty Bank Outlook
The Nifty Bank index has exhibited subdued volatility and indecision, forming small-bodied candles in many recent sessions. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, places immediate resistance for Bank Nifty in the 58,200-58,300 zone. A sustained move above this could extend the pullback towards 58,700 and then 59,000. Support is identified in the 57,300-57,200 zone.
Dr. Ravi Singh, Chief Research Officer at Master Capital Services, noted that Nifty Bank continues its range-bound movement with a bullish bias, trading above its 21, 55, and 100-day EMAs, affirming a positive broader trend. The 55-day EMA, aligning with the 57,100-57,200 zone, acts as a crucial dip-buying support. A sustained breakout above immediate resistance near 58,000 could strengthen bullish momentum towards 58,500.