Indian equity markets started the new week on a firm note, with the Nifty and Sensex making a tentative recovery on Monday after experiencing steep losses on Friday. Though ongoing geopolitical tensions in the Middle East still loomed, a modest easing of hostilities over the weekend and a recovery in some Asian markets helped boost investor sentiment.
The Nifty 50 wasn’t out of the woods and was still losing ground when it closed tentatively positive midday at 24,900.65, up about 182 points (0.74%) over its prior close of 24,718.60. The BSE Sensex too exhibited strength, trading higher by over 550 points (0.68%) at 81,670.49 by mid-day, after closing at 81,118.60 on Friday. This positive action reflects a tentative recovery after two straight days of deep losses.
The market’s performance today has been a mixed bag of global cues, today is just one beautiful flower in the market’s spring. The Middle East crisis continues to be a major worrying factor. The lack of an even bigger collapse at market open indicates that investors are looking forward to a de-escalation of the Middle East crisis. Asian markets, despite a mixed performance, were largely characterized by a positive shift, with Japan’s Nikkei and South Korea’s Kospi closing with healthy moderate gains. US futures were trading lower as of this writing, underscoring the risk aversion that is clearly still a global phenomenon.
Sectoral Performance & Top Movers
The IT industry figured to be one of the best performers today, and it’s the front-runner today in the recovery. The Nifty IT index was up more than 1.2% by mid-morning, with heavyweights TCS, HCL Tech, and Infosys all in the top gainers. This spike has probably been powered by a newly adaptive or weaker Rupee helping the more export-oriented IT companies. It may be due to a greater rotation towards more defensive sectors because of uncertainty abroad. The strength of the Nifty Pharma index was noteworthy.
Wider markets were a mixed bag. The Nifty Midcap 100 and Smallcap 100 indices were marginally lower in early trade, underscoring that even as large-caps have started seeing some buying interest, there is caution at play in the broader market.
Of the Nifty 50 constituents, Cipla, ONGC, Power Grid, SBI Life, and UltraTech Cement were the top gainers – bouncing back from previous sessions’ losses. Tata Motors was a major dragger, down more than 5% in morning trade leading with Jio Financial Services, Dr Reddy’s, and Adani Enterprises.
Rupee Weakness, Crude Oil Highs
The Indian Rupee kept plunging against the US Dollar. It opened weaker at 86.17, widening its loss against Friday’s close of 85.08. This downside is mainly due to increasing geopolitical risk, sustained FPI outflows, and the still spiraling global crude oil prices.
Crude prices stayed high, with Brent crude futures at about $74 to $75 per barrel during early Asian trading. This comes after a monumental increase on Friday thanks to escalated tensions between Israel and Iran spilling over the weekend. Elevated crude prices will be a mixed blessing for India – likely worsening imported inflation and corporate margins here. Safe-haven asset gold, too, inched up in the MCX markets.
Institutional Flows and Outlook
FIIs continued to stay on the sidelines, selling shares worth ₹1,263 crore on Friday, showing they still seem something to worry about. Nonetheless, Domestic Institutional Investors (DIIs) came to the rescue, as they continued to be net buyers, with net inflows of ₹3,041 crore. This continuing tug-of-war between net FII selling and DII buying will be a critical factor in determining the overall market direction in the coming days.
Falling below 24,400, viewed by market specialists as a major line of defense for the Nifty, can make things precarious for the glamour index. While this stays bid above this threshold, the market could continue to be in a balancing market. On the positive side, we find resistance at roughly 24,850, and a breakout above this may open the door for a rally up to the closely watched 25,000 threshold.
Also check:- Indian Stocks Tumble as Geopolitical Tensions Escalate
Investors will be keeping a close eye on geopolitical developments, along with global inflation data and the US Federal Reserve’s first-rate outlook on June 18. While volatility is likely to continue, today’s modest rebound provides a small ray of hope for a possible recovery in the Indian market
