Indian markets open lower amid FPI selling, West Asia tensions; Analysts see volatile trade

NEW DELHI: Indian equity markets opened in the red on Tuesday, weighed down by continued foreign portfolio investor (FPI) selling and continued geopolitical tensions in West Asia. The BSE Sensex fell 322.14 points, or 0.43 per cent, to 73,945.20, while the NSE Nifty 50 declined 153.45 points, or 0.66 per cent, to 23,229.15.

Market experts said domestic indices remain under pressure in the near term, though oversold conditions could support a technical recovery. “We believe the market’s short-term structure is weak, but due to temporary oversold conditions, we expect a technical bounce back from current levels,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.

“For day traders, 23,500/74500 will be a trend-setting level. Below this, the correction wave is likely to continue downwards, potentially pushing the market towards 23,250-23,200/74000-73700. A close below the 23200 level could quickly lead to a retracement towards 22800,” he added.

Analysts said global market sentiment continues to be influenced by developments surrounding the Iran conflict and peace negotiations in West Asia. “The Iran peace deal remains the biggest catalyst for the markets. Trump’s posts that talks were progressing and a deal was imminent in the next week saw a market reversal last evening in the US, with US stocks ending at record high levels,” said Ajay Bagga, Banking and Market Expert.

Dow Jones Futures were down 210.84 points, or 0.41 per cent, at 50,868.04. The S&P 500 gained 19.90 points, or 0.26 per cent, to 7,599.96, while the Nasdaq rose 114.19 points, or 0.42 per cent, to 27,086.81.

Commenting on Asian markets, Bagga said, “This morning in Asia, we are seeing a small cut in Asian markets on the Iran uncertainty as Israel continues its military action in Lebanon contrary to Trump’s claims of having prevailed on both Israel and Hezbollah to tone down attacks on each other. Oil is down slightly, so markets are counting on Trump to deliver an exit from the Iran conflict”.

Most Asian markets were trading lower. GIFT NIFTY was down 178.50 points, or 0.77 per cent, at 23,263. Japan’s Nikkei 225 declined 1.61 per cent, while South Korea’s KOSPI fell 2.57 per cent. Taiwan Weighted Index also traded lower.

However, Hong Kong’s Hang Seng rose 0.93 per cent, while Singapore’s Straits Times, Thailand’s SET Composite and Indonesia’s Jakarta Composite posted modest gains. China’s Shanghai Composite remained largely flat.

Bagga said geopolitical risks continue to keep markets volatile. “The situation remains extremely volatile and the main reason global markets are at record levels despite this extreme geopolitical risk is the AI momentum play, with the huge $800 bn AI infrastructure spends holding up the economic momentum”, he said.

“For India, there is some hope on the US India Trade deal front. However, the continued FPI selling remains a strong overhang for the Indian markets,” Bagga added.

In the commodities segment, gold prices remained under pressure amid a stronger US dollar and geopolitical developments. “Gold prices started the week on a weaker note, pressured by a stronger U.S. dollar and renewed geopolitical uncertainty after Iran announced suspension of negotiations with US following fresh military strikes and Israel’s expanded operations in Lebanon,” said Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd.

Brent crude slipped USD 0.63, or 0.66 per cent, to USD 94.35 per barrel, while WTI crude declined USD 0.71, or 0.77 per cent, to USD 91.45 per barrel. Gold gained USD 11.82, or 0.26 per cent, to USD 4,496.92. Modi said investors would closely track central bank decisions and key economic data during the week.

“President Trump dismissed reports of a breakdown in talks, stating that discussions with Iran were continuing rapidly and that an Israeli strike on Beirut had been called off following his intervention. Gold struggled to attract strong safe-haven demand as investors continued to favour the U.S. dollar and risk assets amid expectations of higher inflation leading to higher for longer rates,” he said.

He added that US manufacturing PMI data came broadly in line with expectations, while market focus this week will remain on the RBI policy meeting and key US labour market data. (ANI)