Indian equity markets are set for a positive start to the week, driven by a significant uptick in GIFT Nifty futures and a temporary de-escalation of geopolitical tensions. GIFT Nifty Futures on the NSE International Exchange were up 139 points (0.58%) at 23,945.50, signaling optimism for domestic indices.
Global Factors Boosting Sentiment
The positive outlook is largely attributed to a lull in fighting over the Strait of Hormuz, which led to a notable slide in crude oil prices. Brent crude fell 5.2% to $91.73 a barrel, while US crude dropped 5.4% to $84.45. This easing of energy market concerns, coupled with reports of the Trump administration pausing military strikes on Iran to allow for diplomatic efforts, has lifted risk sentiment across global markets.
Internationally, Asian markets presented a mixed picture on Monday. While Nikkei and KOSPI saw nearly a one percent drop each, the Hang Seng edged higher. US stocks closed mixed on Friday, with tech stocks facing selling pressure due to concerns over massive AI spending, though falling oil prices offered some support. The Dow Jones Industrial Average rose 0.46%, the S&P 500 gained 0.05%, and the Nasdaq Composite climbed 0.64%.
Beyond equities, the pullback in oil prices contributed to a fall in 10-year Treasury yields by 4 basis points to 4.63%, and the dollar broadly weakened to 101.23. In commodity markets, non-interest-paying gold saw a 1.4% increase, reaching $4,110 an ounce, benefiting from lower yields.
Expert Outlook and Key Challenges
Despite the positive start, market experts caution that the overall environment remains challenging. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that Indian equities could still face pressure if geopolitical tensions in West Asia escalate again, potentially keeping Brent crude elevated and weighing on the rupee and investor sentiment. He highlighted Iran's rejection of a US-backed ceasefire proposal as a key risk.
Ajit Mishra, SVP of Research at Religare Broking, emphasized that elevated crude oil prices, persistent geopolitical tensions, and continued Foreign Institutional Investor (FII) selling are likely to keep volatility high in the near term. He advises participants to maintain a selective approach, focusing on companies with strong earnings momentum, healthy balance sheets, and resilient business outlooks.
FII-DII Flows and Market Technicals
Provisional data from NSE indicated that FPIs were net sellers of domestic stocks to the tune of Rs 3,892.77 crore on Friday, while Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 5,453.55 crore. Dr VK Vijayakumar of Geojit Investments noted that FPIs have been sellers in markets like South Korea and Taiwan this month, and the rise in the US 10-year bond yield to 4.7% could negatively impact FPI flows to emerging markets.
Nifty50 and Sensex Technical Levels
Analysts provided crucial technical levels for Nifty50 and Sensex. Amol Athawale, VP of Technical Research at Kotak Securities, pointed out that the 50-day SMA or 23,850/76,200 acts as an immediate resistance. Below this, weak sentiment could lead to retesting 23,600-23,550/75,400-75,200, with further downside to 23,300-74,400. A break above 23,850/76,200 could extend the rally to 24,000-24,100/76,700-77,000.
Sachin Gupta, VP of Technical Research at Choice Equity Broking, identified immediate support for Sensex in the 75,400–75,500 zone, with a breach potentially extending declines to 75,200–75,000. Resistance is at 76,700–76,800, with a sustained move above possibly paving the way for recovery towards 77,000.
Nilesh Jain, VP of Head of Technical and Derivative Research at Centrum Finverse, noted Nifty is near the lower boundary of a triangle pattern, with crucial support at 23,600. If defended, a pullback towards 24,000 and 24,200 is possible. The 50-DMA and 100-DMA around 23,850 are expected to act as strong immediate resistance.
India VIX advanced to 14.03, indicating elevated risk perception and expectations of higher near-term volatility, according to Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities.
Nifty Bank Outlook
Nifty Bank reclaimed its 200-day EMA, a critical long-term support. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, stated that sustained movement above the 57,100-57,200 resistance zone could extend the pullback towards 57,600, followed by 58,000. Immediate support is at 56,300-56,200.
Jatin Gedia, VP of Technical Research at Teji Mandi Investment Technologies, expects the uptrend to continue towards 57,200 - 57,400, with immediate support at 56,492 (200-DMA). Dr Ravi Singh, Chief Research Officer from Master Capital Services, advised a sell-on-rise strategy until the index reclaims the 57,300 resistance, with support at 56,000-56,100 and a breach potentially leading to 55,500.