Indian equity benchmarks are set for a muted start on Monday, in line with other Asian markets, ahead of the US Federal Reserve’s policy meeting this week where it is widely expected to resume its easing cycle. Trade deal progress will also be keenly watched by the traders. Domestic inflation has eased, which may support the sentiments.
Nifty futures on the NSE International Exchange traded 35 points, or 0.14 per cent, down at 25,170, hinting at a negative start for the domestic market on Monday. Stocks got off to a quiet start in Asia on Monday ahead of an action-packed week. Japan observed a holiday, while Hang Seng and KOSPI gained one-third per cent each.
The near-term market outlook remains constructive, albeit with potential volatility around central bank events, while progress in India–US trade negotiations could provide an additional boost to investor confidence, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.
The Nasdaq notched a record high close on Friday in a mixed trading session. The S&P 500 declined 0.05 per cent to end the session at 6,584.29 points. The Nasdaq gained 0.45 per cent to 22,141.10 points, while the Dow Jones Industrial Average declined 0.59 per cent to 45,834.22 points.
The dollar held steady on Monday ahead of a pivotal week filled with central bank decisions led by the Federal Reserve, while the euro hardly reacted to Fitch’s downgrade of France’s credit rating. Yields on 10-year Treasuries stood at 4.07 per cent, having hit a five-month low of 3.994 per cent last week as a run of soft labour data added to the case for aggressive Fed easing.
The threat of further sanctions on Russia offered some support to oil prices, though concerns about slowing US demand and increased production from OPEC were dominating for the moment. Brent was little changed at $67.01 a barrel, while U.S. crude firmed a fraction to $62.77 per barrel. Gold was down 0.1 per cent at $3,639 an ounce, not far from all-time high of $3,673.95.
“We maintain a positive stance on equities, though the performance of banking majors will likely dictate the pace of momentum in the near term. Investors should continue to focus on domestic cyclicals, while holding defensives,” said Ajit Mishra, SVP of Research at Religare Broking. “Emerging signs of reversal in defense and railway themes offer attractive buying opportunities.”
Provisional data available with NSE suggest that FPIs turned net buyers of domestic stocks to the tune of Rs 129.58 crore on Friday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 1,556.02 crore on a net-net basis. Overseas investors have pulled out Rs 10,782 crore from Indian equities in September so far.
FIIs are likely to reduce their selling and may even turn buyers since there are indications of a turnaround in the Indian market. India’s GDP growth has rebounded strongly in Q1 and the reforms – Budget tax cuts, rate cuts by the MPC and GST rationalisation- have the potential to sustain the growth momentum, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Nifty & Sensex outlook
Nifty50 has shown resilience by holding firmly above the 25,100 mark. It continues to trade above its key moving averages—the 20-day, 50-day, and 200-day EMAs—underscoring the broader bullish undertone. As long as the index sustains above these moving averages, market sentiment is likely to remain constructive, said Choice Broking.
“On the upside, immediate resistance levels are placed at 25,160, followed by 25,250 and 25,500. On the downside, support is seen at 25,000 and then at 24,900, with a deeper breakdown below 24,750 likely to trigger further downside pressure. A ‘buy on dips’ strategy remains favorable, though traders are advised to follow a disciplined approach with strict stop-loss measures,” it said.
Nifty has formed a bullish candle, and on daily and intraday charts. We believe that as long as the market is trading above 25,000/81,800, the bullish sentiment is likely to continue, said Amol Athawale, VP of Technical Research at Kotak Securities. “On the higher side, 25,150–25,200/82,200-82,400 would act as immediate resistance zones for the bulls. A successful breakout above 25,200/82,400 could push the market up toward 25,500–25,550/83,300-83,500,” he said.
Nifty Bank outlook
The 55,100–55,200 zone will act as an immediate resistance for Nifty Bank. A sustained move above 55,200 could lead to an extended pullback rally toward the 56,000 level in the near term, said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities. “On the downside, the 54,400–54,300 zone is expected to serve as strong support in case of any short-term weakness,” he said.
Nifty Bank confirmed a strong base formation around the 53,500 level. Immediate support is now established at 54,400–54,500, offering a healthy cushion for buyers on any dips. The index has displayed resilience by holding key levels, reinforcing the bullish outlook, said Puneet Singhania, Director at Master Trust Group.
“On the higher side, resistance is expected at 55,100–55,200 near the 55-day EMA, and a breakout above this range could extend the rally towards 55,600. With a firm base in place and favorable technical structure, a ‘buy on dips’ approach is well supported,” he said.
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