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The Indian stock market is anticipated to commence the trading week on an optimistic note, potentially defying the prevailing global market downturn. This anticipated positive start is predicated on the expectation that investors will actively seek out stocks that have experienced significant price declines, perceiving them as undervalued and presenting attractive investment opportunities. However, it is crucial to acknowledge that global market conditions remain fragile, with Asian markets exhibiting signs of weakness, trading in negative territory on Monday, August 4th. The GIFT Nifty index, a key indicator of market sentiment, is currently hovering around 24,671, reflecting a modest gain of 0.3 percent or 70 points. This suggests a degree of resilience in the Indian market, despite the external headwinds. In the preceding trading session, Indian equity benchmarks concluded the day lower, mirroring the broader weakness observed in global markets. This decline was attributed to heightened concerns surrounding US tariffs, which dampened investor confidence and triggered a widespread sell-off across various sectors. While the sell-off was broad-based, stocks in the Fast-Moving Consumer Goods (FMCG) sector emerged as a relatively defensive investment option. This was primarily due to their attractive valuations, resilient demand, and relative immunity to disruptions in external trade. Globally, market sentiment has turned negative amid rising U.S. inflation and escalating trade tensions. Wall Street experienced significant losses at the beginning of August, as a dismal US jobs report and the implementation of new tariff hikes by the Trump administration triggered a sharp and broad-based sell-off across global equity markets. The sell-off in Asian stocks has extended for seven consecutive days, fueled by weak US jobs data, which has led to a pullback in equities and increased expectations of an interest-rate cut by the Federal Reserve. This complex interplay of factors is creating a challenging environment for investors, requiring careful consideration and a cautious approach.
Several key levels are crucial to monitor during today's trading session. A decisive break down below the 24,535–24,500 range could trigger further downside movement towards the next support region of 24,300–24,250. Conversely, unless the index convincingly reclaims its overhead resistances, any short-lived rallies are likely to face selling pressure, limiting their potential for sustained gains. With most key triggers now seemingly priced into the market, there is a growing expectation that the market is preparing for a more decisive directional move. On the momentum front, the Relative Strength Index (RSI) has dipped below the 40 mark, indicating a firm bearish hold on market sentiment. The ultimate cue now lies with Foreign Portfolio Investors (FPIs), whose trading activity will be crucial in determining the market's direction. A potential short-covering rally from FPIs could be the only catalyst for a rebound, as their long-short ratio hovers near oversold territory. This means that FPIs may be inclined to reduce their short positions, which could lead to a temporary surge in prices. Dhupesh Dhameja of SAMCO Securities offered a bearish perspective, stating that "The Nifty remains firmly under bearish control, with key support levels giving way and resistance zones steadily shifting downward. Buyer participation appears to be weakening, while put writers are adjusting their positions lower - both are the signs of deteriorating sentiment. On the flip side, call writers continue to dominate, building significant positions at higher levels." This indicates a prevailing sentiment of caution and skepticism among market participants.
The India VIX, a measure of market volatility, climbed 3.75 percent to close at 11.97. Despite two sharp sell-offs last week and a weaker close on the weekly basis, volatility remains contained below the psychological 13 level. This suggests that traders are not expecting a market-wide panic or sharp liquidation, and that the market may remain within a consolidation phase rather than enter a steep free fall. In essence, the market is currently in a state of equilibrium, with neither bullish nor bearish forces dominating. This consolidation phase could persist for some time, as investors await further clarity on key economic and political developments. To stay informed about the latest market developments, investors are encouraged to follow live market blogs, which provide real-time updates and analysis. It is important to note that the views and investment tips expressed by investment experts on financial websites are their own and not necessarily those of the website or its management. Therefore, users are advised to consult with certified experts before making any investment decisions. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. In conclusion, the Indian stock market faces a complex and uncertain landscape, characterized by both domestic opportunities and global challenges. Navigating this environment requires careful analysis, informed decision-making, and a willingness to adapt to changing market conditions. The role of FPI's will be crucial.
Source: Sensex, Nifty may defy global rout to eke out gains at open, key levels to track on August 4