Indian benchmark indices are set for a gap down opening on Friday amid the rising geopolitical tensions in the Middle East. Iran and Israel have waged war, leading to a sharp rise in crude oil prices. On the other hand, the Dollar Index has slipped to multiyear low, breaching the 98 mark.
Nifty futures on the NSE International Exchange traded 220.90 points, or 0.89 per cent, lower at 24,716.50, hinting at a negative start for the domestic market on Friday. Stocks dived in early Asian trade on Friday, led by a selloff in US futures. Japan’s Nikkei tanked more than a per cent, while KOSPI was down 0.60 per cent. Hang Seng, on the other hand, gained marginally.
In a positive development on the domestic front, India’s retail inflation cooled in May to its lowest level in over six years, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. “Overall, we expect the market to remain in a consolidation mode, tracking global market cues and developments on the US-India trade deal,” he said.
US stocks ended higher on Thursday after a strong outlook from Oracle fueled optimism around artificial intelligence, offsetting worries about tension in the Middle East. The S&P 500 climbed 0.38 per cent to end the session at 6,045.26 points. The Nasdaq gained 0.24 per cent to 19,662.49 points, while the Dow Jones Industrial Average rose 0.24 per cent to 42,967.62 points.
The US dollar rallied alongside the safe-haven on Friday. Dollar Index gained 0.4 per cent, and was last at 98.07, in early Asia trading. In the commodities market, Brent crude jumped more than 6 per cent to $73.56 per barrel. Gold climbed 1 per cent to about $3,419 per ounce.
Markets may remain fragile in the short term, with global policy actions and commodity trends likely to drive direction. Traders are expected to stay defensive until macro clarity improves and earnings season offers fresh cues, said Vikram Kasat, Head of Advisory at PL Capital.
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 3,831.42 crore on Thursday. On the other hand, domestic institutional investors (DIIs) remained buyers of Indian equities to the tune of Rs 9,393.85 crore on a net-net basis.
“Given the prevailing uncertainty, we recommend maintaining strict stop-losses in short-term trades, particularly in the midcap and smallcap space. It is also advisable to avoid aggressive long positions until a clearer directional trend emerges,” said Ajit Mishra, SVP of Research at Religare Broking.
Nifty & Sensex outlook
Shrikant Chouhan, Head of Equity Research at Kotak Securities believes that the short-term market texture is weak, but a fresh selloff is possible only after the dismissal of 24,825/81,500 or below the 20-day SMA. “Below this, the market could slip to 24,700-24,650/81,100-81,000. On the other hand, above 24,920/81,800, we could expect a quick pullback rally up to 25,000-25,050/82,000-82,150,” he said.
A small green candle was formed on the daily chart with a long upper shadow. This market action indicates a range bound action in the market at the highs, said Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities. “The near-term uptrend of Nifty remains intact and the market is currently facing stiff resistance around 25200 levels,” he said.
Nifty Bank outlook
Nifty Bank extended corrective decline for the third session in a row as it formed a bear candle with a lower high and lower low highlighting continuation of profit booking after recent up move, said Bajaj Broking Research. It is trading above its short- and long-term moving averages signaling positive bias. The index shall be above the support of 55,200-55,500 and head higher,” it added.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.