Indian benchmarks indices are set to open on a muted note on Tuesday, even as the Asian peers saw optimistic sentiment ahead of the Federal Reserve’s rate decision. Besides this, the progress in US trade negotiations with China and India may drive the sentiments at Dalal Street ahead.
Nifty futures on the NSE International Exchange traded 9.20 points, or 0.04 per cent, down at 25,155.50, hinting at a muted start for the domestic market on Tuesday. Asia stocks climbed on Tuesday as investors bet the US Federal Reserve would resume its easing cycle this week. KOSPI was up more than a per cent, while Nikkei rose half a per cent. Hang Seng was seen in red.
“Market participants would track the US retail sales data to be released on Tuesday. Overall, we expect the market to continue its consolidation, while tracking the US Fed policy outcome and progress in India-US trade talks,” said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.
The three major US stock indexes closed higher on Monday as investors await the Federal Reserve’s crucial policy meeting later this week. The Dow Jones Industrial Average rose 49.23 points, or 0.11 per cent, to 45,883.45, the S&P 500 gained 30.99 points, or 0.47 per cent, to 6,615.28 and the Nasdaq Composite gained 207.65 points, or 0.94 per cent, to 22,348.75.
The Fed cut bets have in turn kept pressure on the dollar, which on Tuesday was struggling near a roughly two-month low against the British pound. US Treasury yields rose slightly after falling in the previous session, with the two-year yield last at 3.5409 per cent. The benchmark 10-year yield was up about 1 bp to 4.0451 per cent.
In commodities, oil prices extended their rise from the previous session, as investors assessed the impact of Ukrainian drone attacks on Russian refineries. Brent crude futures rose 0.25 per cent to $67.59 per barrel, while U.S. crude edged 0.22 per cent higher to $63.44 a barrel. Spot gold scaled a record high of $3,689.27 an ounce, thanks to a weaker dollar and hopes of Fed cut.
The broader outlook may remain cautious ahead of the US Fed meeting and sustained foreign institutional outflows, said Ajit Mishra, SVP of Research at Religare Broking. “We recommend maintaining a positive yet cautious stance, with an emphasis on stock selection aligned to rotational sectoral trends and themes such as defense and railways for long positions,” he said.
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 1,268.59 crore on Monday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 1,933.33 crore on a net-net basis.
Nifty & Sensex outlook
For day traders, 25,050/81,750 and 25,000/81,500 would act as key support zones, while 25,125/82,000 and 25,150/82,100 could serve as crucial resistance levels for the bulls, said Shrikant Chouhan, Head of Equity Research at Kotak Securities. “On the higher side, a successful breakout above 25,150/82100 could push the market up to 25,150–25,200/82,400-82,500. Conversely, below 25,000/81500, it could retest the 50-day SMA level or 24,900/81200.”
Overall, while the broader setup remains constructive, Nifty50 needs a strong breakout above the triangle resistance to confirm continuation of the uptrend. Talking about crucial levels, the zone of 25,160-25,200 will act as a crucial hurdle for the index, said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities.
“Any sustainable move above the level of 25,200 will lead to a sharp upside rally upto the level of 25,350, followed by the 25,500 level in the short term. The zone of 24,950-24,900 will act as important support for the index on the downside,” he added.
Nifty Bank outlook
The Bank Nifty has formed a doji candle with a higher high and higher low signaling extension of the pullback for the nineth consecutive sessions. Following a phase of consolidation around the crucial 200 days moving average, the index has absorbed selling pressure and is now positioning itself at the recent breakdown area of 54,800-55,000 levels, said Bajaj Broking.
“Index sustaining above the breakdown area of 55,000 will open further upside towards 55,300 initially and then towards the 56,000-56150 levels in the coming weeks being the 61.8 per cent retracement of the entire decline. On the downside immediate support is placed at 54,350 levels being the recent gap area. While key support is placed at 53,500 levels” he said.
Nifty Bank formed a Doji candle on the daily chart—signaling indecision. A decisive break below the key support of 54,800 could drag the index toward 54,670 and 54,500, said Amruta Shinde, Technical & Derivative Analyst at Choice Equity Broking. “On the upside, resistance is placed in the 55,000–55,170 zone, and a breakout above this range may trigger momentum toward 55,600.”
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