The Indian stock market is poised to commence the week on an optimistic trajectory as investors find reassurance in a transient alleviation of geopolitical tensions, thereby enhancing risk sentiment across international markets. Market sentiment improved following indications from the Trump administration that it would halt additional military strikes on Iran, thereby facilitating diplomatic initiatives and alleviating immediate worries regarding a wider regional conflict. Reflecting the improved sentiment, Gift Nifty futures are trading around 23,938, compared with the previous Nifty close of 23,767, suggesting a gap-up opening for domestic equities.
The diplomatic overture has prompted a notable decline in crude oil prices, with WTI decreasing over 6% from recent peaks near $93 per barrel to about $84, while Brent has softened to roughly $88 after briefly surpassing the psychologically significant $100 threshold last week. “A sustained decline in energy prices would help unwind some of the inflationary pressures that have unsettled financial markets in recent weeks, supporting global growth expectations and reducing the risk of a more hawkish policy stance from the Federal Reserve. Even so, investors are likely to remain cautious, with developments in the Middle East continuing to be the primary driver of market sentiment and commodity prices,” said Ponmudi R.
Global markets:
US equities concluded a tumultuous week with a mixed performance on Friday, as investors weighed positive economic indicators against ongoing geopolitical uncertainties and softness in technology stocks. The S&P 500 experienced a modest increase of 0.05%, whereas the Dow Jones Industrial Average saw a more substantial rise of 0.46%, bolstered by a notable 3.5% surge in Apple. The Nasdaq Composite experienced a decline of 0.64%, primarily influenced by ongoing selling pressure in semiconductor stocks.
Separately, S&P Global’s flash PMI indicated that US business activity expanded at its fastest pace in eight months, supported in part by increased consumer spending and tourism associated with the FIFA World Cup. Investor focus is now directed towards a particularly active week in the earnings calendar, as Microsoft, Amazon, and Meta Platforms prepare to disclose their quarterly results. Their updates on artificial intelligence investment, cloud computing demand, and capital expenditure plans are anticipated to serve as a vital indicator of the durability of the AI-driven investment cycle. “Alongside the US Fed meeting this week, the earnings from these technology heavyweights are expected to be the primary catalysts shaping sentiment across U.S. equities and global financial markets,” Ponmudi R stated.
Asian equities exhibited a mixed performance on Monday as investors took a cautious approach in the wake of last week’s technology-driven decline on Wall Street. Japan’s Nikkei experienced a decline of nearly 0.5%, whereas South Korea’s Kospi saw a more significant drop of over 0.6%. Despite the recent decline in crude oil prices enhancing risk appetite, market participants continue to concentrate on the current earnings season, developments in the Middle East, and the upcoming US Federal Reserve policy meeting, all of which are anticipated to influence global market trends.
European equities concluded the trading session on a positive note on Friday, as the pan-European index experienced an increase of 0.82%. This uptick was attributed to a decline in crude oil prices, which bolstered risk sentiment, even in the face of newly imposed U.S. tariffs ranging from 10% to 12.5% on certain goods from the European Union. Germany’s DAX exhibited a robust performance, achieving a gain of 1.36%. In comparison, the UK’s FTSE 100 saw an increase of 0.91%, while France’s CAC 40 recorded an uptick of 0.88%. Energy giants Shell and BP provided a boost to the overall market, whereas Volkswagen disclosed quarterly earnings that fell short of expectations and announced intentions to cut up to 100,000 jobs as part of a comprehensive restructuring initiative.
Domestic Market:
Commenting on the outlook of the Nifty 50 and Sensex today, Amol Athawale, VP — Technical Research at Kotak Securities, stated, “We are of the view that the short-term texture of the market is still on the weak side.” For positional traders, the 50-day SMA or 23,850/76200 would serve as an immediate resistance zone. As long as the market remains below this level, it is probable that weak sentiment will persist. On the downside, it could retest the levels of 23,600-23,550/75400-75200. Further downward movement may also persist, potentially pulling the index to 23,300-74400. Conversely, a breakthrough above 23,850/76200 may prolong the pullback to the range of 24,000-24,100/76700-77000.
Regarding the Bank Nifty’s outlook today, Vatsal Bhuva, noted, “The Bank Nifty index formed a bullish candlestick on the daily chart as buying interest emerged near its crucial 50-DMA, indicating support at lower levels.” On the hourly chart, a positive RSI divergence indicates the potential for a short-term recovery after three consecutive sessions of decline. However, this seems to be a relief bounce rather than a confirmed trend reversal. A sustained bullish outlook will be confirmed only after a decisive close above 58,000. Until then, traders should adopt a prudent, level-oriented strategy. Immediate support is positioned at 56,000, whereas 57,200 serves as the initial resistance.