Indian equity benchmark indices are expected to open with a significant gap-up on Monday, driven by strong positive global cues and a notable fall in crude oil prices. GIFT Nifty Futures, an early indicator for the domestic market, surged 214.50 points, or 0.90 per cent, to 23,958.50, signaling an optimistic start for traders.
Global Factors Fueling Optimism
The positive sentiment stems from several international developments. US stocks closed higher on Friday, buoyed by signs of progress in talks aimed at resolving the Middle East conflict and a robust corporate earnings season. This positive momentum carried over to Asian markets, which also saw gains on Monday as the prospect of a peace deal in the Iran region boosted risk appetite. Japan's Nikkei index climbed over 3.2 per cent, while Hong Kong's Hang Seng and South Korea's KOSPI each advanced by nearly a per cent.
Adding to the bullish outlook, crude oil prices hit two-week lows to start the week. Brent crude futures dropped over 4 per cent to $98.83 a barrel, and US West Texas Intermediate (WTI) was down 4 per cent at $92.03 a barrel, partly due to the reopening of the Strait of Hormuz. The US dollar also saw a slight weakening, with the dollar index at Rs 98.96, while Bitcoin rose 0.6 per cent to $77,043.60 and gold prices increased over 1 per cent.
FII-DII Activity and Analyst Insights
Provisional data from the NSE indicated that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks on Friday, offloading shares worth Rs 4,440.47 crore. Conversely, Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 6,003.53 crore into Indian equities. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, attributed sustained FII selling to factors such as subdued earnings growth in India, more attractive prospects in other markets, high US bond yields, and rupee depreciation fears.
Amid this dynamic environment, analysts recommend a cautious and selective investment approach. Ajit Mishra, SVP of Research at Religare Broking, advised traders to avoid aggressive leverage and maintain disciplined risk management, emphasizing a hedged and stock-specific strategy. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that Indian equities could experience volatility due to monthly expiry but anticipate a gradual upside if crude oil prices continue to soften and peace talks progress.
Technical Outlook for Nifty, Sensex, and Nifty Bank
Nifty50 Outlook: Technically, Nifty50 formed a bullish candle on weekly charts and is consolidating positively near its 50-day Simple Moving Average (SMA). Amol Athawale, VP of Technical Research at Kotak Securities, suggests that for positional traders, the 50-day SMA or 23,700/75,400 will act as immediate support. A sustained move above 23,850/75,900 could propel the index towards 24,000–24,200. A drop below 23,700, however, could lead to a retest of 23,400–23,300.
Sensex Outlook: The Sensex encountered selling pressure around the 75,800–76,000 zone. Hitesh Tailor, Technical Research Analyst at Choice Equity Broking, identifies immediate support at 74,800–75,000 and resistance near 76,000–76,200. A decisive move beyond this range will likely dictate the next directional trend.
Nifty Bank Outlook: Nifty Bank extended its gains, supported by strong buying in private banking stocks, though it continues to consolidate. Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities, places immediate resistance in the 54,400-54,500 zone. A sustainable move above this level could push the index towards 54,900 and then 55,300. Immediate support for Nifty Bank is at 53,600-53,500.
The India VIX, a measure of market volatility, declined nearly 5 per cent last week, closing below the 18 mark. Nilesh Jain, VP of Head of Technical and Derivative research at Centrum Finverse, noted that a further cooling of volatility would continue to support bullish sentiment in the market.