India’s equity benchmarks are expected to open higher on Monday, following five straight weeks of losses as investors assess US tariffs and the Federal Reserve’s future policy action after weak labour market data.
However, muted Q1 earnings by India Inc and relentless FIIs selling continue to stoke volatility at Dalal Street.
Nifty futures on the NSE International Exchange traded 57.30 points, or 0.23 per cent, up at 24,684.50, hinting at a positive start for the domestic market on Monday. Asian share markets followed Wall Street lower on Monday as fears for the US economy. Japan’s Nikkei was down 1.65 per cent, while Shanghai’s Hang Seng was marginally down.
Markets could be seen opening higher amid early gains in the Gift Nifty index despite a mixed trend in other Asian gauges, said Prashanth Tapse, Senior VP (Research) at Mehta Equities. “However, lingering concerns over India’s unresolved trade pact with the US administration with persistent selling by the FIIs and mixed Q1 earnings so far would continue to weigh on sentiment.”
US stocks slumped on Friday as new tariffs on dozens of trading partners and a surprisingly weak jobs report spurred selling pressure. The Dow Jones Industrial Average fell 542.40 points, or 1.23 per cent, to 43,588.58, the S&P 500 lost 101.38 points, or 1.60 per cent, to 6,238.01 and the Nasdaq Composite tanked 472.32 points, or 2.24 per cent, to 20,650.13.
In commodity markets, gold was flat at $3,361 an ounce , having climbed more than 2 per cent on Friday. Oil prices extended their latest slide as OPEC+ agreed to another large rise in output for September, which completely reverses last year’s cuts of 2.2 million barrels per day. Brent dropped 0.6 per cent to $69.24 a barrel, while US crude also fell 0.6 per cent to $66.93 per barrel.
The dismal US jobs data did put a dent in the dollar’s crown of exceptionalism, snuffing out what had been a promising rally for the currency. The dollar index was pinned at 98.659 , having been toppled from last week’s top of 100.250. Markets have essentially already eased for the Fed with two-year Treasury yields down another 4 basis points at 3.661 per cent.
Volatility is expected to remain high in the coming week amid key central bank decisions, corporate earnings announcements and trade-related developments, said Ajit Mishra, SVP of Research at Religare Broking. “Investors are advised to maintain a stock-specific approach, focusing on quality companies across sectors that have shown relative strength in the recent downturn,” it said.
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 3,366.40 crore on Friday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 3,186.86 crore on a net-net basis. FPIs made a total outflow of Rs 31,988 crore in the month of July.
President Trump’s tariff tantrums imposing 25 percent tariff on Indian goods and an unspecified penalty for trade in energy and defence goods with Russia was unexpected and therefore has impacted market sentiments in the short-term, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Nifty & Sensex outlook
“We believe that the short-term market texture is weak, but a fresh sell-off is possible only after the dismissal of 24,900/81600. Below this, the market is likely to retest the levels of 24,600-24,500/80,700-80,400, said Amol Athawale, VP-technical Research, Kotak Securities. “On the flip side, 25,050/82100 and 25,100/82300 would act as crucial resistance zones for short-term traders.”
As long as Nifty holds above the 24,500 support, minor rebounds are possible, but the broader trend remains weak. A sell-on-rise strategy is advised unless the index reclaims the 24,750-24,800 zone. A breach below 24,500 may accelerate downside towards 24,100-24,000, said Puneet Singhania, Director at Master Trust Group.
Nifty Bank outlook
Nifty Bank formed a bearish-bodied candle with an upper wick, accompanied by consistent trading volumes. This reflects sustained selling pressure at higher levels and limited buying interest, hinting at a possible consolidation or mild corrective phase in the near term, said Choice Broking. “As long as the index holds below the 56,500 mark, a ‘sell on rise’ strategy remains advisable, with downside targets placed at 55,500 and 55,000,” it said.
Nifty Bank continues to show signs of weakness, with the zone of 55,550 to 55,150 acting as a crucial support area, said Pravesh Gour, Senior Technical Analyst at Swastika Investmart. “A breakdown below 55,150 could accelerate the selling pressure and drag the index lower towards the next key support at 54,500. On the upside, Resistance on bounce-backs is seen at 56000 and 56500.”