The Indian benchmark equity indices will open higher on Monday thanks to strong earnings reported by the index’s heavyweight, Reliance industries. Asian markets are also showing positive signs.
Investor caution will likely persist due to the increased geopolitical tensions that have arisen between India and Pakistan after a recent terror attack.
Early indicators indicate a positive beginning for the domestic markets. As of 7:59am IST Gift Nifty futures traded around 24,258.5, which indicates a possible gap-up for the Nifty50 compared to Friday’s close of 24,039.35.
The optimism is a result of positive trends in the broader Asian market, where the markets started this week with a cautious rise despite the uncertainty over US trade policy and recent verbal spats between Washington and Beijing.
The escalating tension between India and Pakistan continues to be a major factor in the market’s sentiment, despite these positive global signals.
India’s diplomatic actions against Pakistan in response to a recent attack on Kashmir led to an increase in market volatility and a decline in the Sensex and Nifty indexes during the Friday session.
VLA Ambala (Co-Founder, Stock Market Today) told India Today that the India VIX rose by 5% during Friday’s trading session. This reflects growing concern over the possible war between India, Pakistan and other countries.
She expects the Nifty to find near-term stability between “23.850 and 23.680”, with resistance at “24.180 and 24.370.” The Bank Nifty could be supported between “54.100 and 53.850” but face resistance in between “55.100 and 55.350.”
FPI flows resilient, long-term view positive
As of Friday, it is encouraging to see that foreign portfolio investors have continued their interest in Indian stocks, registering eight sessions of net buying.
This resilience is attributed by analysts to the weakening US Dollar trend, and to India’s perceived relative superiority in comparison to other global major economies.
The geopolitical environment could dampen this excitement in the short term.
Specific corporate developments, as well as macro-factors, will also be a focus.
Reliance Industries is expected to be a key positive influence after reporting better-than-anticipated fourth-quarter profits, driven by strong performance in its retail and digital segments.
Mahindra & Mahindra is another stock that could see some activity, after its announcement of acquiring a majority (58.96%) stake in the truck and bus maker SML Isuzu at a cost of approximately Rs 555 crore ($65 million).
Technical analysts observe potential significant movements from a sectoral perspective.
Auto sector has shown signs that it is breaking out of the “falling wedge pattern”, which can be a bullish sign.
The IT sector, which is crucial, has retested a major resistance level, after breaking the previous trendline. Its performance in this week will be critical to confirm a sustained recover.
In contrast, “shooting star” patterns observed in PSU Banks and Realty sectors could indicate potential short-term pullbacks. This adds another layer of uncertainty amid the current geopolitical uncertainties.
This article Indian markets open: Sensex and Nifty target higher; focus is on earnings and geopolitics first appeared on The ICD
