Market Outlook for Indian Equity Indices
Indian equity benchmark indices are expected to open flat on Wednesday, following a two-day decline. This cautious outlook is driven by ongoing geopolitical tensions, particularly the lack of progress in US-Iran peace negotiations, which continue to pose risks. Additionally, traders are closely monitoring potential US Federal Reserve rate hikes and concerns over a weak monsoon season.
The market is likely to remain mixed as geopolitical uncertainties persist in West Asia. While ceasefire negotiations are ongoing in Qatar, recent military strikes have dampened expectations of a lasting truce. Despite lower crude oil prices, investor sentiment remains cautious, according to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.
GIFT Nifty, Asian Markets & US Stocks
GIFT Nifty Futures on the NSE International Exchange fell 6.60 points or 0.03% to 24,002.50, suggesting a muted start for the domestic market on Wednesday. Asian markets opened the quarter with caution, with the Nikkei slightly higher, while the Hang Seng and KOSPI declined by 1% each.
In the US, stocks closed higher on Tuesday, with investors remaining optimistic about economic and earnings growth despite the Middle East conflict. The Dow Jones Industrial Average rose 136.46 points or 0.26% to 52,319.20, the S&P 500 gained 58.93 points or 0.79% to 7,499.36, and the Nasdaq Composite surged 393.58 points or 1.52% to 26,213.72.
Crude, US Dollar, Gold & More
Brent crude rose 0.5% to $73.31, though it remains far from its May peak of $126.41. US crude increased 0.7% to $69.96 per barrel. Gold, however, struggled after a tough quarter, declining 0.4% to $3,990 an ounce. The US dollar saw a boost from rising Treasury yields, holding steady at 101.24.
Sectoral participation in the Indian market was mixed, with IT and FMCG sectors underperforming, said Ajit Mishra, SVP of Research at Religare Broking. He advised maintaining a stock-specific approach, focusing on relatively stronger stocks within their respective sectors while practicing disciplined risk management.
FII-DII Flows
Provisional data from the NSE showed that Foreign Portfolio Investors (FPIs) were net sellers of Indian equities, offloading shares worth Rs 2,556.75 crore on Tuesday. In contrast, Domestic Institutional Investors (DIIs) turned buyers, purchasing shares worth Rs 6,842.34 crore on a net basis.
Nifty50, Sensex & India VIX Outlook
The market displayed narrow-range activity, with a small bearish candle on daily charts indicating indecisiveness between bulls and bears. Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that traders are waiting for a breakout on either side.
On the upside, key resistance levels for Nifty50 and Sensex are at 24,000 and 77,000 respectively. A successful breakout above these levels could push the indices to 24,150-24,200 and 77,500-77,700. However, if the market falls below the 50-day Simple Moving Average (SMA) at 23,800/76,300, selling pressure may intensify, potentially leading to a retest of 23,650-23,600/75,800-75,500.
Nifty found strong support near its 50-DMA at 23,840, rebounding sharply from those levels. Nilesh Jain, VP & Head of Technical and Derivative research at Centrum Finverse, noted that the index continues to face resistance around its 100-DMA at 24,130. A decisive close above this level would confirm a meaningful breakout.
Momentum indicators, including the MACD and RSI, continue to support a positive bias. The MACD is in a buy crossover above the zero line, and the RSI remains above the 50 mark, indicating sustained bullish momentum. As long as the index stays above its short-term 21-DMA at 23,690, the buy-on-dips strategy remains viable.
Sensex formed a bearish candle, signaling profit-taking after the recent recovery. Hitesh Tailor, Technical Research Analyst at Choice Equity Broking, noted that while the index closed weakly, it managed to hold above the crucial 76,300 zone, suggesting continued buyer support. He added that the market is likely to remain range-bound with stock-specific action.
Nifty Bank Outlook
Nifty Bank formed a bearish candle and closed lower for the second consecutive day, according to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. The immediate support for Bank Nifty is in the 57,100-57,000 zone, with resistance at 58,000-58,100.
Nifty Bank has formed a third small bearish candlestick pattern, signaling consolidation amid stock-specific action. Bajaj Broking Research noted that the index needs to break above and sustain last week's high to trigger a fresh upward move towards 59,200. The lows of the last two weeks around 57,000 make it a crucial short-term support level. The overall bias remains positive, and the current breather should be used as a buying opportunity.
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