Indian equity benchmark indices are expected to open higher on Monday, snapping recent losses. Gift Nifty futures on the NSE International Exchange were up 221.70 points, or 0.93 per cent, at 24,144.50, signaling a positive start for the domestic market.
Global Cues and Market Sentiment
Globally, US stocks ended mostly higher, bolstered by optimism surrounding potential negotiations between the US and Iran, which could de-escalate regional conflicts. A surge in Intel shares also extended the rally in semiconductor stocks. Asian markets mirrored this positive trend, with South Korea's KOSPI soaring 2.25 per cent and Japan's Nikkei up 1.4 per cent in early trade.
Despite the positive open, underlying sentiment remains subdued due to elevated crude prices and persistent selling by Foreign Institutional Investors (FIIs), largely influenced by ongoing geopolitical tensions. Analysts like Siddhartha Khemka of Motilal Oswal Financial Services suggest that markets will remain sensitive to geopolitical developments, crude oil movements, and foreign fund flows, advising a cautious near-term outlook.
Provisional data from the NSE revealed that FIIs were net sellers of domestic stocks worth Rs 8,827.87 crore on Friday, while Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 4,700.71 crore into Indian equities. Interestingly, FPIs have shown selective buying in mid and small-cap stocks even while offloading large-cap holdings.
Nifty50 & Sensex Technical Outlook
Technical analysis indicates that the market has slipped below the 50-day Simple Moving Average (SMA) of 24,300 for Nifty50 and 78,000 for Sensex, primarily due to profit booking. Amol Athawale, VP Technical Research at Kotak Securities, noted a bearish candle on weekly charts and a reversal formation on daily charts, suggesting further weakness from current levels.
- Crucial Reference: Traders should watch 24,000/77,000 as a critical reference point.
- Nifty50 Support: Immediate support is seen at 23,800, followed by 23,700. A decisive break below 23,500 could trigger further downside towards 23,635 and potentially the 23,500-23,450 range.
- Nifty50 Resistance: Immediate resistance is placed at 24,000, then 24,150, and 24,350 levels.
Choice Broking highlighted that Nifty50 closing below its 100-week EMA reflects a deterioration in the broader trend, signaling a cautious medium-term outlook. The weekly technical indicator at 43.47 also suggests subdued strength.
Nifty Bank Outlook
The Nifty Bank index formed a small bearish candlestick pattern on weekly charts, indicating consolidation with a corrective bias after a strong recent rally. Bajaj Broking suggests that some consolidation at current levels cannot be ruled out, expecting the index to trade within the 54,500-57,500 range.
- Bank Nifty Support: Short-term support is positioned in the 54,500-54,000 zone, aligning with recent lows.
- Bank Nifty Resistance: The zone of 56,500-56,600 is likely to act as immediate resistance.
Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, noted that Bank Nifty failed to sustain above its 100-day moving average and has corrected nearly 2.5 per cent from its recent high. He emphasized that a sustainable move below the 55,500-55,400 zone could extend weakness towards 55,000 and then 54,500 in the short term.
Given the prevailing macro uncertainty, elevated crude prices, and persistent global risks, investors are advised to maintain a cautious and selective approach, prioritizing capital preservation and avoiding aggressive leverage.