Indian benchmark indices, the Nifty and Sensex, are anticipated to commence Monday's trading session with significant gains. This positive outlook is primarily driven by a global market rally, spurred by reports of a potential peace agreement between the United States and Iran.
Global Optimism Fuels Domestic Gains
GIFT Nifty Futures on the NSE International Exchange indicated a strong start, climbing 344.90 points, or 1.46 percent, to reach 24,031.50. This surge reflects a broader improvement in global risk sentiment following news of a tentative US-Iran peace deal, which is expected to ease geopolitical tensions and inflationary pressures worldwide.
Asian markets mirrored this optimism, with Japan's Nikkei and South Korea's KOSPI each soaring over 5 percent, while Hong Kong's Hang Seng also registered gains. US stocks concluded Friday on a high note, buoyed by hopes for the peace deal and a strong debut from SpaceX, marking a significant public listing.
Impact on Commodities and Currency
The prospect of a US-Iran agreement led to a notable drop in crude oil prices, with Brent crude falling 4 percent to $83.80 a barrel. This decline in energy costs is a key factor supporting market sentiment. Concurrently, gold prices climbed 1.9 percent to $4,300 an ounce, while the US dollar weakened, with the dollar index slipping to a 10-day low of 99.492.
Analysts suggest that easing geopolitical concerns and supportive policy measures are providing near-term encouragement for investors. Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, highlighted that the market recovery indicates investors are now pricing in a more favorable geopolitical outcome. He emphasized that developments in the US-Iran negotiations, crude oil prices, and Foreign Institutional Investor (FII) flows will be crucial determinants of market sentiment.
Investor Activity and Key Levels
Provisional data from the NSE revealed that FIIs were net sellers of domestic stocks, offloading shares worth Rs 1,082.18 crore on Friday. However, Domestic Institutional Investors (DIIs) provided significant buying support, acquiring Indian equities worth Rs 5,341.29 crore on a net basis.
Nifty50 and Sensex Outlook
Technical analysis suggests a positive trajectory for Indian indices. Amol Athawale, VP of Technical Research at Kotak Securities, noted that both Nifty and Sensex cleared their 20-day Simple Moving Average (SMA) resistance, forming strong reversal patterns on daily charts and bullish candles on weekly charts. Key support levels for Nifty are identified at 23,500/23,350 and for Sensex at 74,800/74,300. As long as markets trade above these levels, the uptrend is likely to continue, potentially rallying towards 23,850/75,900 and 24,000-24,100/76,300-76,600 respectively.
Hitesh Tailor, Technical Research Analyst at Choice Equity Broking, added that Sensex's breakout from a prolonged sideways range signals a potential trend reversal. Immediate support for Sensex is at 74,500–74,700, with resistance at 76,000–76,200.
Vatsal Bhuva, Technical Analyst at LKP Securities, pointed out Nifty's sharp rebound from 23,075 and its reclamation of the 20-DMA, indicating strengthening momentum. The bullish undertone is expected to persist above the 23,500–23,450 support zone, with a potential move towards the 24,000 mark.
Nifty Bank and India VIX
Nifty Bank has emerged as a strong performer, confirming a breakout from a Symmetrical Triangle pattern. Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, anticipates the Bank Nifty to extend its upward trajectory, testing levels of 57,500 and 58,300. Strong support is expected around 56,200–56,000.
The India VIX, a volatility index, sharply declined below 15, which could further support the bullish market outlook. Nilesh Jain, VP-Head of Technical and Derivative research at Centrum Finverse, advises a buy-on-dips strategy for Nifty Bank as long as it sustains above 56,000, eyeing targets of 57,500–58,000.