Indian equity markets are set for a negative opening on Friday, with GIFT Nifty Futures on the NSE International Exchange trading 140.50 points, or 0.60 per cent, lower at 23,343.50. This signals a challenging start for domestic indices as global factors weigh heavily on investor sentiment.
Global Pressures and Surging Oil Prices
The anticipated market decline follows a downturn in US stocks on Thursday. Investor concerns were fueled by August's producer price data and surging oil prices, intensifying worries that the Federal Reserve might hike interest rates in the coming week. Climbing Treasury yields made equities less attractive, leading to declines across major US indices, including the S&P 500, Nasdaq, and Dow Jones Industrial Average.
Asian markets also tumbled on Friday, with South Korea's KOSPI and Japan's Nikkei falling nearly 3 per cent each, and Hong Kong's Hang Seng down over a per cent. This widespread negativity is largely attributed to soaring Brent crude prices, which climbed to a four-month high of $109.97 a barrel on Friday, capping a weekly gain of nearly 13 per cent. The escalation of the Middle East conflict, now in its seventh month, has heightened risks of supply disruptions, pushing oil prices higher and making India, a major oil importer, particularly vulnerable. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that the conflict shows no signs of de-escalation.
Adding to the domestic market's woes is a busy IPO season, including large offerings from NSE and potentially Jio Platforms, which has also absorbed market liquidity.
FII-DII Flows and Market Technicals
Provisional data from NSE indicates that Foreign Portfolio Investors (FPIs) were net sellers of Indian stocks on Thursday, offloading shares worth Rs 438.28 crore. Conversely, Domestic Institutional Investors (DIIs) provided some support, turning net buyers to the tune of Rs 1,025.85 crore.
Nifty50 Outlook
Technically, the short-term market outlook remains weak, though temporary oversold conditions could trigger a pullback. Shrikant Chouhan, Head of Equity Research at Kotak Securities, identified 23,400 and 74,700 as key support zones for day traders. Immediate hurdles for bulls are seen at 23,500 and 75,000. A sustained move above these levels could extend the bounce back to 23,700-23,750. Conversely, a drop below 23,400 could accelerate selling pressure, potentially pushing Nifty50 to 23,300-23,250.
Rupak De, Senior Technical Analyst at LKP Securities, observed a hammer pattern on Nifty50's daily timeframe, suggesting a pause in the bearish trend. He placed immediate support between 23,380 and 23,400, with resistance at 23,550-23,600. A sustained breach above 23,600 could extend recovery towards 23,800.
Sensex and India VIX
The Sensex continues to trade below its 50-DEMA (around 76,953) and 200-DEMA (near 78,274) on daily charts, indicating a weak broader trend. The Relative Strength Index (RSI) at 30.21 suggests persistent bearish momentum and near-oversold conditions. Sachin Gupta, VP of Technical Research at Choice Broking, noted immediate support for Sensex at 74,400-74,600, with resistance at 75,200-75,500.
Meanwhile, India VIX declined 1.05 per cent to 11.80, suggesting that volatility remains relatively contained despite the fragile technical structure, according to Dhupesh Dhameja, Derivatives Research Analyst at SAMCO Securities.
Nifty Bank Analysis
Nifty Bank formed a small bullish candle with a lower high and lower low on the daily chart, signalling consolidation with a corrective bias. It sits around the lower band of its 10-week range (56,000-58,700). Bajaj Broking warned that a breach below 56,000 could extend the decline to 55,300 and 54,800. The immediate bias remains negative, and only a sustained formation of higher highs and higher lows would signal a pause in the downtrend.
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, highlighted that Nifty Bank trades below key moving averages, indicating a weak short-term trend. Momentum indicators are subdued, with the daily RSI at 38.83. The 56,000-55,900 zone is crucial support. A sustained breach below 55,900 could intensify selling pressure, leading to a decline towards 55,400. On the upside, the 200-day EMA zone of 56,700-56,800 acts as a significant hurdle.