Indian equity benchmarks opened the Tuesday session with caution, being risk-averse, given the ongoing global volatility caused by sharply rising geopolitical tensions in the Middle East. Following a limited rebound on Monday, care, tech, energy, and industrials stocks with bearish-sector bias. After a quick snapback on Monday, investors found themselves skittish, resulting in a largely muted session characterized by sectoral rotation as well as stock-specific action.
As per the NSE data as of mid-day trading (10:30 AM IST), the Nifty 50 was trading in negative territory at 24,869.95, down about 76 points (0.31%) from its previous close of 24,946.50. The BSE Sensex followed suit, dropping about 249 points (0.31%) to 81,547.16 after having finished at 81,796.15 on Monday. Even supportive economic data today can’t escape the shadow of all that’s happening in Russia and Ukraine, forcing a cautious opening, a sign that panic has been replaced by a fear of the unknown that unsettles overly bullish markets.
Global cues continued to play out a mixed picture, leading to the market’s direction. US markets had closed sharply higher on Monday, fueled by a strong rebound in tech stocks and easing inflationary pressure in the form of lower oil prices. Asian markets offered a mixed to negative picture this morning as Japan’s Nikkei and South Korea’s Kospi gained modestly but the rest of the region traded close to flat or even negative. The new Israel-Iran conflict, which has seen Israel and Iran now waging a war in full view of the world, is the top worry for world investors.
Sectoral Dynamics and Major Drivers
Sectoral performance on Tuesday was completely all over the place. The Nifty Realty index was the most powerful sectoral leader on Tuesday, jumping more than 1% in early trade, led by major strength among real estate stocks such as Godrej Properties, soaring after announcing a big new land acquisition deal in Pune. The Power and Telecom sectors were the recipients of buying interest.
The Auto, FMCG, and Healthcare Sectors faced a selling spree. Among the 50 Nifty constituents, Asian Paints, NTPC, and Axis Bank were among the major gainers, lending support to the benchmark indices. NTPC especially captured attention as its board is expected to review a new, massive fundraising plan later this week.
Some of the big guns were buffeted by strong headwinds. Sun Pharma which was among the major laggards, fell more than 2%, and Tata Motors and IndusInd Bank took a beating. Recent reports of promoter stake sales in group companies have hurt sentiment. Tata Motors has been a regular laggard in previous sessions. It wasn’t just Avenue that sunk after block deal reports— stocks like Vishal Mega Mart experienced significant plunges.
Rupee Performance Commodity Watch
In the foreign exchange market today, the Indian Rupee opened with a gain of 8 paise against the American currency at 85.96. That modest prayer today follows a fairly steep pulling back over the last couple of days. The Rupee’s trajectory will surely remain in focus. It is possibly the most sensitive currency to FII flows and global risk appetite.
In the ag commodity space, crude oil prices continued to be a boogeyman. Even with this recent pullback from the highs, at the time of writing Brent crude was still trading above $73.67 per barrel, 0.60% higher than yesterday. Such continued volatility and elevated price levels are a direct result of the current volatility in the Middle East and may once again begin to bear down on India’s import bill and domestic inflation. Even gold, an otherwise safe-haven asset, was benefitting from upward movement.
Also check:- Indian Markets Rebound Modestly Amid Easing Geopolitical Jitters
Monday’s data showed that FIIs were net sellers, selling shares in the cash segment to the tune of ₹2,539 crore. This is good news that the outflow continues, albeit today a bit less extreme than Friday’s, but clearly demonstrates continued extreme trepidation. Domestic Institutional Investors (DIIs) continued to play a counter-balance, with net purchases at ₹5,781 crore, showing how strong the domestic liquidity continues to be.
According to market analysts, the immediate support for Nifty is at 24,700 and it will face resistance at around 25,200. The broader market tone will depend on the Middle East conflict’s de-escalation as well as crucial macroeconomic data from around the world. Volatility is likely to continue to be characteristic of trading in the near term. Investors should remain selective and seek opportunities in sectors with solid fundamentals.
