Stock Market Today: GIFT Nifty Signals Positive Start; Can Nifty Hold 24,000?

Can Dalal Street bounce back after Friday’s tech-led decline? Dalal Street starts the new trading week on a positive note, with GIFT Nifty giving encouraging signals, but investors remain cautious after Friday’s sharp sell-off in IT stocks. GIFT Nifty is up by 104.50 points, or 0.43 per cent, at 24,153 at 7:18 am, indicating a firm start for benchmark indices. The GIFT Nifty opened at 24,044 as against its previous close of 24,048.50.

The positive indication comes after a mixed finish for Indian equities last week. Technology stocks were under heavy selling on Friday after global IT major Accenture gave weak guidance, although the wider market held its ground. Analysts said that the stabilisation of IT stocks and whether Nifty can continue to defend the crucial 24,000 level will largely drive trade on Monday.

GIFT Nifty suggests positive start

Early signals are pointing to a positive start for Dalal Street, amid persistent fears over the technology space. The gains in GIFT Nifty are reflective of improving sentiment after a volatile end to last week and can provide support to benchmark indices at the opening bell.

However, traders are expected to remain cautious as global developments, crude oil prices and foreign institutional investor (FII) activity will continue to play a crucial role in determining market direction.

What’s happened on Friday?

On Friday, the market eased off the steam after a string of five daily gains, led by the information technology sector amid a report that Accenture provided cautious guidance.

The Nifty 50 is just about 8.5% weighted towards IT, but heavyweight stocks like Infosys and TCS dragged the benchmark down sharply.

However, despite a decline in the closing sessions, the Indian stock market still recorded decent performance over the week. While the BSE Sensex increased nearly 1.7 per cent, the Nifty 50 has also gained a similar level during the week. The Nifty Midcap outperformed the benchmark gains by 2.9 per cent, followed by Nifty Smallcap gaining 3.2 per cent to suggest healthy mid- and small-cap support.

Conflicting signals from world markets

Markets in Asia opened on a cautious note Monday amid jitters over the geopolitical situation in West Asia. Asian markets had traded mixed, but Japan’s Nikkei 225 jumped over 2% to trade above 72,700, and the South Korean Kospi gained over 1.5 per cent right after the market opening. Japan’s Topix also traded higher, though the Kosdaq index was fractionally lower.

The US stock market was closed last Thursday for the Juneteenth federal holiday.

Investors are also paying close attention to developments between the US and Iran, as peace talks were under way in Switzerland even as US President Donald Trump warned of potential military action if hostilities flare up again.

Oil prices ease ahead of market open

Prices in the oil market declined sharply on Monday morning, offering some comfort to markets across the globe. Brent crude shed 1.35 per cent to $79.48 a barrel, while the US benchmark of crude oil, WTI, fell 0.15 per cent to $75.73 a barrel. Normally a dip in prices would be good news for India – curbing inflation, providing support to the rupee and lowering costs in oil-importing businesses – but market participants remain concerned of geopolitical events in the Middle East that may cause jitters in the energy market.

Market outlook: Will Nifty sustain 24,000?

The overall market structure is still positive with a cautious stance as long as the Nifty is above the psychologically important 24,000 mark, according to Ankit Jaiswal, senior research analyst at Univest and Kunal Singla, associate director at Univest.

But analysts say that Friday’s correction largely affected technology stocks and did not indicate broad-based weakness across sectors. Banking, consumption and some defence stocks are still relatively firm and these could provide support to the benchmark if the selling pressure on IT stocks eases.

Bank Nifty futures also ended higher by about 123 points in premium, indicating that traders are still in a positive mood despite the volatility seen on Friday.

Important levels to watch today

According to market experts, Nifty is likely to find immediate support at the 24,000 level. If Nifty holds this level, the short-term uptrend will remain intact. If the price breaks below 23947, it can be pulled down to 23852.

Stocks likely to remain in focus today

Several big-name stocks closed higher Friday, despite the selloff in information technology stocks.

Eternal, Sun Pharma, Larsen & Toubro, ICICI Bank and Bajaj Finance were the top gainers.

Among the laggards were Infosys, TCS, SBI, Tata Steel and Axis Bank. According to analysts, bank and consumer stocks could help offset weakness if technology shares recover during Monday’s session.

Also, rupee, bonds and foreign flows will also be in focus

This week, investors will closely watch equities, along with the rupee, bond yields, and crude oil prices.

The Indian rupee climbed 0.8% last week to close at 94.32 per US dollar, its best weekly performance in 11 weeks, boosted by lower crude oil prices following a peace deal between the United States and Iran, Reuters reported. But a hawkish tilt by the US Federal Reserve limited the gains and lifted the US dollar.

Traders will also track US economic releases, such as orders for durable goods and the Personal Consumption Expenditures (PCE), to seek hints about Fed rates. The Indian 10-year benchmark government bond yield eased for the fourth consecutive week to finish at 6.8533 per cent, as reported by Reuters. Traders said that yields are likely to be in the 6.80%-6.90% band this week, supported by continued inflows from foreign investors into Indian debt.

What should investors watch today

Be prepared for three things in Monday’s session: the reaction of IT stocks after Friday’s sharp correction, the Nifty holding above 24,000 and the reaction of global markets to developments in the Middle East.

Dalal Street could try to extend its uptrend if tech stocks stabilise and bank stocks hold on to their recently accrued gains. However, volatility in crude oil and heightened geopolitical concerns might continue to fuel volatility.

(Disclaimer: This article is for informational purposes only and should not be considered investment advice. The views, opinions, and recommendations expressed herein are those of the respective experts. Readers are advised to consult a qualified financial advisor before making any investment decisions.)

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