Pre-Market Update: GIFT Nifty Hints at Muted Start on Wednesday

Pre-Market Update at 7:40 AM: Indian equity markets are likely to open cautiously on Wednesday as GIFT Nifty signals a muted start, while crude oil, elevated U.S. Treasury yields and sustained foreign selling remain key concerns. However, gains across several Asian markets and contained volatility could limit immediate downside after the Nifty 50 recently slipped to a six-month low.

The Nifty 50 fell sharply on Tuesday, declining 64.05 points or 0.28 per cent to close at 22,716.20. The index moved between an Intraday low of 22,569.65 and a high of 22,753.25 after falling as much as 211 points during the session. The benchmark has also recorded an eight-week losing streak, its longest since 2020, keeping market sentiment cautious.

GIFT Nifty on the NSE IX traded around 22,802, down 28 points, signalling a muted start for the Nifty 50 on Wednesday. Another market reading placed GIFT Nifty around 22,824, down 6 points or 0.03 per cent from the previous close of 22,830, indicating limited directional bias at the opening.

From a technical perspective, immediate resistance for the Nifty 50 is seen in the 22,800-22,900 zone, followed by a stronger hurdle around 23,000-23,100. On the downside, 22,550-22,500 remains the immediate support zone, followed by stronger support around 22,400-22,500. Tuesday's low of 22,569.65 is also an important near-term reference point.

India VIX, a measure of expected market volatility, declined 1.65 per cent to settle at 13.41. Despite the weakness in benchmark indices, the fall in volatility indicates that implied market volatility remained relatively contained.

Overseas markets provided mixed-to-positive cues. Asian stocks gained for the first time in three sessions as easing concerns over the oil market helped stabilise sentiment ahead of a crucial U.S. inflation reading. The dollar was also on track for its strongest monthly performance since June.

S&P 500 futures were up 0.1 per cent as of 10:09 a.m. Tokyo time, while Hang Seng futures declined 0.3 per cent. Japan's Topix gained 0.5 per cent and Australia's S&P/ASX 200 advanced 0.2 per cent. Euro Stoxx 50 futures rose 0.5 per cent.

U.S. stocks ended slightly lower on Tuesday as Treasury yields continued to rise ahead of key inflation and labour-market data. Investors also assessed comments from Federal Reserve officials for indications about the future path of interest rates. The S&P 500 declined 0.17 per cent to 7,670.84, the Nasdaq Composite slipped 0.09 per cent to 26,797.54, while the Dow Jones Industrial Average fell 0.26 per cent to 51,349.92.

The U.S. Treasury market remained a key pressure point, with the 10-year Treasury yield around 5.25-5.29 per cent. Higher yields can weigh on equity valuations and emerging-market assets by increasing borrowing costs and influencing global capital flows. Weak consumer confidence data also added to the cautious tone.

Crude oil prices rose on Wednesday after U.S. President Donald Trump denied that he would be willing to ease sanctions on Iran, while Qatar pushed for peace talks. Oil prices had declined in the previous session following signs of a recovery in crude supply from the Middle East. Brent crude was trading near USD 103 per barrel, while WTI crude was around USD 89.30 per barrel.

Elevated crude prices remain a concern for import-dependent sectors such as aviation and paints because of higher input costs, while upstream oil producers can benefit from stronger realisations. Developments surrounding the U.S.-Iran situation and Middle East supply remain important variables for domestic markets.

Gold prices remained steady on Wednesday but were on track for a monthly decline as expectations of higher interest rates weighed on the precious metal. COMEX gold was around USD 4,211 per ounce, while silver was near USD 61.74 per ounce.

The U.S. dollar remained close to this year's high against the euro and was on track for its largest monthly gain against the common currency in 14 months. The Dollar Index was around 101.41, supported by U.S. growth expectations and higher interest rates.

The Indian rupee settled marginally higher at around Rs 95.94 per U.S. dollar on Tuesday, remaining close to the psychologically important Rs 96 per dollar level. Another market reading placed the rupee near Rs 95.98 per U.S. dollar. Possible Reserve Bank of India intervention and a pullback in oil prices helped limit volatility.

Foreign portfolio investors remained heavy sellers in Indian equities. FIIs sold shares worth Rs 9,980.22 crore on Tuesday, while domestic institutional investors bought equities worth Rs 6,952.71 crore. Continued foreign selling remains one of the key factors weighing on domestic market sentiment, although DII buying is providing some support.

The Sensex closed at 72,529.07 on Tuesday, declining 0.33 per cent. Bank Nifty ended at 54,259.95, down 0.39 per cent. Bank Nifty could face resistance near 54,600, while 54,000 remains an important support level.

SAIL is under the F&O ban for Wednesday. Securities enter the F&O ban period when their position crosses 95 per cent of the market-wide position limit.

On the domestic front, no major macroeconomic data release or RBI policy announcement for Wednesday morning was verified in the available information. Investors are likely to monitor corporate announcements, crude oil movements, currency trends and foreign fund flows during the session.

Pharmaceutical stocks could remain in focus after reports of tariff exemptions for certain speciality drug exports to the U.S. Sun Pharma and Aurobindo Pharma may attract attention following the development involving Indian pharmaceutical exports.

Tata Steel, Poonawalla Fincorp, Cummins India and KPI Green Energy are also likely to remain on the radar amid company-specific developments and sector-related news. Renewable energy stocks could remain in focus following developments in the sector.

Overall, domestic equities are likely to begin Wednesday's session with a cautious bias. Traders will track the 22,800-22,900 resistance zone and the 22,550-22,500 support area, while movements in crude oil, U.S. bond yields, the rupee and FII flows could influence market direction.

Disclaimer: The article is for informational purposes only and not investment advice.

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