Indian equity markets are anticipating a cautious start on Wednesday, reflecting subdued global cues and a continued selloff on Wall Street. Investors are closely watching the US Federal Reserve's two-day policy meeting, which concludes later today, for signals on monetary policy amidst persistent inflation worries.
Global Factors Weigh on Sentiment
GIFT Nifty Futures on the NSE International Exchange showed a marginal uptick of 3.10 points (0.01%) to 23,227, suggesting a flat opening for domestic markets. This comes as Wall Street stocks extended their decline on Tuesday, driven by rising US Treasury yields, growing debt concerns, and surging crude oil prices that kept buyers on the sidelines.
Asian markets presented a mixed picture in early Wednesday trading, with Nikkei and KOSPI edging lower, while the Hang Seng index recorded a slight gain.
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that Indian equities are likely to remain weak due to elevated crude prices, renewed inflation concerns, and uncertainty surrounding the US Federal Reserve's policy decision. Unresolved geopolitical tensions and supply chain issues further contribute to inflationary pressures.
Commodities and Currencies Update
- Crude Oil: Brent crude futures slipped 0.6% to $108.08 a barrel in Asian trading after rising on Tuesday, though investor sentiment remains fragile with prices sustaining above $107 amid global energy supply concerns.
- US Dollar: The US dollar index traded near a two-week high at 99.656.
- US Treasury Yield: The yield on the US 10-year Treasury bond was marginally lower by 0.8 basis points at 4.9875% in Asian trade.
- Cryptocurrencies: Bitcoin saw a slight dip of 0.1% to $75,816.24, and Ether slipped 0.2% to $2,403.27.
Ajit Mishra, SVP of Research at Religare Broking, advised investors to prefer hedged positions and consider booking partial profits in broader-market holdings that have recently outperformed, given the negative cautious stance on the index.
FII-DII Flows and Market Volatility
Provisional data from NSE indicated that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks on Tuesday, offloading shares worth Rs 2,977.86 crore. Conversely, Domestic Institutional Investors (DIIs) were net buyers, injecting Rs 2,686.05 crore into Indian equities.
Market volatility intensified, with the India VIX surging over 9%, signaling heightened risk perception among investors. Broader markets significantly underperformed the frontline indices, according to Sudeep Shah, Vice President of Technical and Derivatives Research at SBI Securities.
Nifty50 and Sensex Outlook
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, observed that a long bear candle formed on the daily chart, indicating significant weakness across the board. The underlying trend for Nifty is sharply down, with a decisive slide below 23,000 potentially dragging it to the 22,600-22,500 range. Any pullback rally might face resistance at 23,300.
For Sensex, Sachin Gupta, VP of Technical Research at Choice Equity Broking, noted that the index surrendered the 74,500 level and maintained a downward trajectory. Immediate support is placed at 73,500–74,000, while 74,800–75,000 is likely to act as a key resistance zone. The broader trading range is 73,500–75,000, with a sideways-to-bearish bias.
Nifty Bank Outlook
Nifty Bank formed a sizable bearish candle, failing to move above 57,000 and closing deep in the red around 56,000. It is currently positioned near the lower band of its 11-week range (56,000-58,700), as per Bajaj Broking Research.
A breach and close below last week's low of 55,700 would signal an extension of the corrective decline towards 55,200 and 54,800. The immediate bias for Nifty Bank remains down below 57,000; only a sustained formation of higher highs and higher lows on the daily chart, closing above 57,000, would signal a pause in the current downtrend.
Vatsal Bhuva, Technical Analyst at LKP Securities, highlighted Nifty Bank's weak chart structure and bearish sentiment, supported by a bearish crossover in the RSI. He suggested a 'sell-on-rise' strategy, with immediate support at 55,500 and positional support in the 55,000–55,100 zone. Resistance is positioned at 56,500.