Indian equity benchmark indices are staring at a gap-down start on Tuesday on the back of cautious undertone as persistent geopolitical uncertainty continues to cloud investor sentiment. Elevated crude oil continues to add to the pressure on the Indian markets and currency. Delayed deal between the UR and Iran is also denting the sentiments further.
Indian equities are expected to remain range-bound with a marginal negative bias in the near term amid persistent Foreign Institutional Investor selling and ongoing uncertainty around global macro developments, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. “Focus is likely to remain on stock-specific opportunities in the midcap space.”
GIFT Nifty, Asian markets & US stocks
GIFT Nifty Futures on the NSE International Exchange were 197.50 points, or 0.84 per cent, up at 23,264.50, hinting at a negative start for the domestic market on Tuesday. Asian stocks made a cautious start to trading on Tuesday amid uncertainty over West Asia conflict. KOSPI and Nikkei dropped up to 2 per cent each, while Hang Seng was seen up more than a per cent.
Wall Street stocks posted modest gains on Monday as investors watched developments in US-Iran peace negotiations. The Dow Jones Industrial Average rose 46.42 points, or 0.09 per cent, to 51,078.88, the S&P 500 gained 19.90 points, or 0.26 per cent, to 7,599.96 and the Nasdaq Composite advanced 114.19 points, or 0.42 per cent, to 27,086.81.
Crude, US dollar, gold & more
The US dollar index held steady at 99.18, firmly within the tight range for the past three weeks. In cryptocurrencies, bitcoin was down 0.2 per cent at $71,232.83. Oil prices held on to most of the previous session’s sharp gains in early trade on Tuesday. Brent crude futures inched up 0.06 per cent, to $95.04 a barrel while US West Texas Intermediate fell 0.18 per cent, to $91.99 a barrel.
Investor sentiment remained under pressure due to persistent foreign institutional selling following the MSCI rebalancing-related outflows witnessed last week, Ajit Mishra, SVP of Research at Religare Broking. We recommend the ‘sell-on-rise’ approach for the Nifty while continuing to focus on stock-specific opportunities based on sectoral trends, alongside disciplined risk and position management.”
FII-DII flows
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 3,911.68 crore on Monday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 5,109.13 crore on a net-net basis.
Nifty50, Sensex & India VIX outlook
The market faced consistent selling pressure at higher levels after a gap-up open. It has formed a bearish candle on daily charts and it is holding a lower top formation on intraday charts, which is largely negative. The short-term texture of the market is weak, but due to temporary oversold conditions, a technical bounce back, said Shrikant Chouhan, Head of Equity Research at Kotak Securities.
“For day traders, 23,500/74,500 would act as a trend decider level. Below this, the correction wave is likely to continue on the downside, with the market potentially slipping to 23,250–23,200/74,000-73,700. On the flip side, above 23,500/74,500, the bounce back could continue until 23,650–23,700/74,800-75,000,” he added.
The Nifty continues to decline as it failed to withstand selling pressure at higher levels. Overall sentiment is likely to remain bearish, with the RSI witnessing a bearish crossover, further reinforcing negative momentum, said Rupak De, Senior Technical Analyst at LKP Securities. “In the short term, it may drift towards the 23,200 level. On the upside, immediate resistance is placed around 23,500.”
Sensex witnessed a sharp reversal after the gap-up opening. Immediate support is now placed around 73,500–73,700, while resistance is seen near 74,800–75,000. A sustained move below the support zone could trigger further weakness, whereas a recovery above resistance may improve short-term sentiment, said Hitesh Tailor, Technical Research Analyst at Choice Equity Broking.
On the volatility front, India VIX rose by nearly 2 per cent to close around 16.50 . A sustained move above the 17 mark could further heighten market uncertainty and keep participants on the edge, potentially leading to increased volatility in the coming sessions, said Nilesh Jain, VP- Head of Technical and Derivative research at Centrum Finverse.
Nifty Bank outlook
Bank Nifty remained under pressure, trading in a lower high–lower low formation. The RSI has declined from 55 to 43, signalling increasing bearish momentum, while the MACD line continues to trade below the zero line, further reinforcing the negative bias, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.
“Going ahead, the immediate support for Bank Nifty is placed in the 53,200-53,100 zone. Any sustainable move below this zone could result in Bank Nifty extending its weakness towards 52,700, followed by 52,300 in the short term. On the upside, the immediate resistance for Bank Nifty is placed in the 54,000-54,100 zone,” it added.
Nifty Bank in the daily chart formed a bearish candle with a lower high and a lower low, index in the process closed below last week low 54,116 highlighting continuation of the downward bias. Index likely to consolidate in the range of 52,500-55,600 only a breakout or breakdown will signal directional moment in the index, said Bajaj Broking Research.
“It has key support placed at 52,700-52,500 being the confluence of the lower band of the 8th April bullish gap area and the 61.8 per cent retracement of the previous pullback (49,955-57,456). On the higher side key resistance at 55,600-56,000 levels being the confluence of last week high and 50 days EMA,” it added.