Indian equity benchmark indices are expected to open flat on Wednesday, as investors take a pause after a three-day rally. This cautious sentiment precedes the Federal Reserve's highly anticipated policy decision, where interest rates are widely expected to remain unchanged. However, improving geopolitical developments, particularly a potential US-Iran peace agreement, and a significant drop in crude oil prices are providing underlying positive momentum.
Global Market Cues and Key Drivers
GIFT Nifty Futures on the NSE International Exchange were marginally up by 5 points (0.02%) at 24,002, signaling a flat start for the domestic market. Asian stocks showed mixed performance in early trade, with Japan's Nikkei and South Korea's KOSPI slightly up, while Hong Kong's Hang Seng edged lower.
In the US, the Nasdaq Composite and S&P 500 closed lower on Tuesday. The Nasdaq shed 307.60 points (1.15%) to 26,376.34, and the S&P 500 lost 42.94 points (0.57%) to 7,511.35. Conversely, the Dow Jones Industrial Average marked its second consecutive record close, rising 328.64 points (0.64%) to 51,999.67.
A significant development is the dive in Brent crude futures below $80, reaching their lowest point since the US-Iran conflict began in March. This fall in crude oil prices, coupled with the US-Iran peace deal, has improved global sentiment, according to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. Gold prices edged higher on Wednesday, up 0.4% to $4,348.93 per ounce, while the dollar eased, with the dollar index falling to 99.53.
FII-DII Activity
Provisional data from NSE indicates that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks on Tuesday, offloading shares worth Rs 749.18 crore. Domestic Institutional Investors (DIIs), however, remained buyers, with a net investment of Rs 0.06 crore.
Nifty50 and Sensex Outlook
Market experts suggest a continued gradual positive momentum for Indian equities. Shrikant Chouhan, Head Equity Research at Kotak Securities, noted that the market is maintaining a higher bottom formation on intraday charts, supporting an uptrend. A fresh rally for the Nifty50 and Sensex is anticipated once the 24,000/77,000 levels are surpassed, potentially leading to 24,100–24,200/77,300-77,500. Key support zones for day traders are identified at 23,850/76,500 and 23,800/76,300. A fall below 23,800/76,300 could make the uptrend vulnerable.
Aakash Shah, Research Analyst at Choice Equity Broking, highlights that Sensex continues to show positive momentum after reclaiming key support levels. Immediate resistance is at 77,300, followed by 77,400, with a strong support area between 76,300–76,400.
Rupak De, Senior Technical Analyst at LKP Securities, states that Nifty sustaining above the 20 EMA indicates a positive short-term trend, though upside may be limited with choppy price action. Resistance is seen in the 24,070–24,200 zone, while immediate support is at 23,900, followed by 23,700.
Nifty Bank Outlook
The Nifty Bank index formed a small body candle, indicating indecisiveness, but is trading above its short and long-term moving averages. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, points to the 57,700-57,800 zone as an immediate hurdle. A decisive move above 57,800 could trigger a rally towards 58,500 in the short term, with 56,800-56,700 acting as a crucial support area.
Bajaj Broking Research noted that Nifty Bank formed a doji candlestick pattern, signaling consolidation after a strong 4,800-point rally in 10 sessions. The overall positive bias is expected to continue towards 58,300, provided it sustains above 55,500-56,000. Any dips should be seen as buying opportunities, with a decisive breach below 55,500 negating the positive outlook.