Sensex, Nifty open flat; experts say volatility to continue as markets inching towards all time high

MUMBAI: Domestic equity benchmarks opened with marginal gains on Tuesday, continuing their upward trajectory as positive sentiment kept markets near all-time high levels. The Nifty 50 index began the session at 26,021.80, marking a rise of 8.35 points or 0.03 per cent, while the BSE Sensex opened at 85,042.37, up 91.42 points or 0.11 per cent.

The indices are attempting to inch closer to their record levels, with Nifty’s all-time high of 26,277.37 and Sensex’s peak of 85,978.25, both achieved in September 2024. Market experts noted that while the headline indices remain firm, the broader market is witnessing signs of weakness as volatility intensifies near the record highs.

Experts said that a turnaround in the markets could happen anytime soon as corporate earnings regain momentum. Ajay Bagga, banking and market expert, said, “Indian markets are pointing to a negative open. But with optimism rising on a US-India trade deal, we expect Indian markets to do better than peers after 14 months of stark underperformance by over 30 per cent”.

Bagga added that the 100 basis points of rate cuts delivered by the RBI have yet to be fully transmitted through the economy, creating room for additional support to growth. “We expect Indian markets to outperform global peers hereon,” he said.

The Nifty 100 declined by 0.22 per cent, Nifty Midcap 100 slipped 0.19 per cent, and Nifty Smallcap 100 dropped 0.50 per cent, reflecting cautious sentiment among investors. Sectoral trends on the NSE also remained largely negative, with the exception of Nifty PSU Bank, which held steady.

Nifty Auto was down 0.37 per cent, Nifty IT fell 0.51 per cent, Nifty Pharma dipped 0.27 per cent, and Nifty Metal declined 0.75 per cent, signalling a broad-based soft tone across key sectors. On the technical front, sentiment remained buoyant as the Nifty continued its upward momentum.

Sudeep Shah, Head-Technical and Derivatives Research at SBI Securities, said, “Bank Nifty broke out of its consolidation phase and scaled a fresh all-time high on Monday, signalling strength in the banking space. Considering the current chart structure, the Nifty is likely to continue its northward journey and test the level of 26150, followed by 26300 in the short term. While on the downside, the support is shifted higher in the zone of 25900-25880 level”.

Global cues remained largely negative, with Asian markets trading in the red, mirroring declines in the European and US markets on Monday. Concerns around the sustainability of the crowded AI trade weighed heavily on investor sentiment, especially as US markets saw another negative session.

The focus is now on upcoming US government data releases and Nvidia’s results, which could dictate near-term global market direction. Adding to the caution, a speech by US Federal Reserve Governor Waller shifted concerns from inflation to the risk of a potential recession, reflected in weakening labour market trends and other leading indicators.

As markets hover near record levels, investors remain watchful of global developments and the possibility of heightened volatility in the days ahead. (ANI)