Stock market today: Gift Nifty down 69 pts; key levels for Nifty, Sensex & Nifty Bank

Indian benchmark indices are likely to open lower on Wednesday after India struck multiple terror camps in Pakistan and Pakistan-occupied-Kashmir (POK). However, the Nifty futures made a decent recovery from lows amid some positive global cues but a gap-down opening is likely on the cards.

Nifty futures on the NSE International Exchange traded 68.40 points, or 0.28 per cent, lower at 24,363, hinting at a negative start for the domestic market on Wednesday. Asian stocks rose on Wednesday as investors welcomed news of a meeting between top US and Chinese trade officials. Hang Seng, Shanghai and KOSPI were trading higher.

Market volatility was further aggravated by escalating geopolitical tensions between India and Pakistan, coupled with uncertainty surrounding the US Federal Reserve’s upcoming interest rate decision, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. "Progress on the US trade deal could provide near-term support to the markets," he said.

Wall Street stocks fell on Tuesday as investors grew frustrated with the lack of US trade deals and awaited the US Fed's policy. The Dow Jones Industrial Average fell 0.95 per cent to 40,829, the S&P 500 declined 0.77 per cent to 5,606.91, and the Nasdaq Composite tanked 0.87 per cent to 17,689.66.

The Indian rupee declined against the US dollar in the non-deliverable forward (NDF) market on Wednesday, after Indian armed forces hit multiple sites in Pakistan and Pakistan-occupied Jammu and Kashmir. The dollar rose a little bit amid the positive developments on trade talk, which bodes well for the greenback.

Oil prices rose on Wednesday on signs of weakening production in the US and higher demand in Europe and China as buyers emerged after prices fell to new lows earlier in the week. Brent crude futures gained 0.6 per cent to $62.52 a barrel, while US West Texas Intermediate crude was at $59.53 a barrel, up 0.74 per cent.

Prashanth Tapse, Senior VP (Research) at Mehta Equities said that weak global market cues weigh on market sentiments. Investors continue to maintain caution amid worries over the skirmishes on the Indo-Pak border, while falling crude oil prices indicate that a slowing global economy going ahead will hit demand, he said.

Provisional data available with NSE suggest that FPIs turned net buyers of domestic stocks to the tune of Rs 3,794.52 crore on Tuesday. On the other hand, domestic institutional investors (DIIs) turned net sellers  of Indian equities to the tune of Rs 1,397.68 crore.

The domestic market has been consolidating, driven by cautious sentiment amid India-Pakistan border tensions. Weak earnings growth for the current quarter has further impacted the market, said Vinod Nair, Head of Research at Geojit Investments. "Investors are closely monitoring India's bilateral trade negotiations with the US," he said.

Nifty outlook
As long as the market is trading below 24,500/81,000, the weak sentiment is likely to continue. On the lower side, the market could retest the level of 24,250/80,300, said Shrikant Chouhan, Head Equity Research, Kotak Securities. "Further downside may also continue, which could drag the index down to 24,175/80,000. On the other side, a dismissal of 24,500/81,000 could push the market up to 24,580-24,625/81,300-81,400," he said.

Nifty is poised to retest the lower end 24,100 of the broader range. The daily momentum indicator has triggered a negative crossover which is a sign of weakness from a short term perspective, said  Jatin Gedia , Technical Research Analyst at Mirae Asset Sharekhan. "Thus, considering the above parameters we change our outlook on the Nifty to range bound between 24600 – 24100."

Nifty Bank outlook
The recent correction can be attributed to mean reversion, as the index faced resistance near the upper Bollinger Band on the daily chart, said Om Mehra, Technical Research Analyst at SAMCO Securities.

"The next crucial support lies near the 38.2 percent retracement level, around 53,400, which also coincides with the 20-Day simple moving average and adds strength to this zone. However, the primary trend remains bullish. The current decline appears to be a normal correction," it said.
 

Bank Nifty is seen consolidating in a 2,000 points range in the last 9 sessions after the recent strong rally of 11 per cent in the preceding 6 sessions, said Bajaj Broking. "We expect it to extend the consolidation in the range of 54,000-56,000, On the downside, key support is seen between 54,000-53,500 levels being the previous breakout area and the previous major gap area."