Indian equity benchmarks are poised for a subdued start on Thursday, with GIFT Nifty futures signaling a drop of over 60 points. The cautious sentiment stems from a confluence of global factors, including soaring crude oil prices, firming US Treasury yields, and persistent geopolitical tensions in West Asia. These elements are collectively dampening risk appetite, particularly in emerging markets like India.
Global Headwinds Impacting Market Sentiment
International markets closed lower on Wednesday, setting a negative tone for Asian peers. US stocks saw declines as crude oil prices surged past $100 a barrel, ahead of critical inflation data expected later in the week. The S&P 500, Nasdaq, and Dow Jones Industrial Average all registered losses.
Asian markets mirrored this weakness on Thursday, with Hang Seng and KOSPI tumbling up to 1.5 percent, and Nikkei also down nearly a percent. The primary driver remains the intensification of Middle East tensions, particularly around the Strait of Hormuz, which has fueled concerns over global energy supply disruptions and pushed Brent crude futures above the $100 mark.
Key Levels to Watch for Nifty, Sensex, and Nifty Bank
Analysts are advising caution, given the prevailing market conditions. Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that the market maintains a lower high-lower low formation, suggesting continued weakness. For day traders, immediate resistance zones are identified at 23,550/75,300 for Nifty and Sensex, respectively. A sustained trade below these levels could see Nifty slip to 23,300-23,200 and Sensex to 74,300-74,000.
Rupak De, Senior Technical Analyst at LKP Securities, highlighted that Nifty has fallen below its previous swing low, with the RSI entering the oversold zone. While the trend remains weak, Nifty holding above 23,500 could trigger a recovery, whereas a fall below 23,400 might lead to further correction.
For the Sensex, Sachin Gupta, VP of Technical Research at Choice Equity Broking, pointed to immediate support at 74,500–74,600, with 75,000–75,200 acting as a key resistance zone. The broader trading range is expected to stay between 74,500 and 75,200.
Nifty Bank Outlook Remains Bearish
The Nifty Bank index also shows signs of weakness, forming a bearish candle for the fourth consecutive session. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, identified 55,900–55,800 as a crucial support area. A breach below this could see the index move towards 55,400. On the upside, 56,800–56,900 is an immediate hurdle.
Bajaj Broking echoed this sentiment, noting the Nifty Bank's close below 56,500 and its position at the lower band of its 10-week range. A decline below 56,000 could extend the correction towards 55,300 and 54,800.
FII-DII Flows and Volatility
Provisional data indicates that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks, offloading Rs 582.99 crore on Wednesday. Conversely, Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 1,509.04 crore into Indian equities. Meanwhile, the India VIX, a measure of market volatility, surged 6.81 percent to 11.92, signaling increased turbulence.