Rupak De, Senior Technical Analyst at LKP Securities, said the Nifty is facing resistance at the 21-EMA on the daily chart despite Friday’s positive close. He added that the RSI remains in a bearish crossover, indicating weak underlying momentum.”India VIX remained volatile, keeping market participants tense. In the coming days, volatility is likely to remain high with the index expected to fluctuate in the range of 25,300-25,800. Immediate support is placed at 25,500, while resistance is seen at 25,650,” De said.
Factors likely to drive the market on Monday
1) Trump tariffs
While European and US markets closed higher on Friday, cheering the US Supreme Court’s decision to strike down President Donald Trump’s sweeping tariffs, global markets will now monitor developments following the court order.
The Apex Court ruling was initially seen as positive for equities. Shortly after the decision, however, Trump signed new orders imposing a 10% tariff on imports from all countries, later increasing it to 15%, saying the measure would take effect “almost immediately.”
2) Geopolitics
The US-Iran standoff remains a major concern for global stock markets, glimpsed on Thursday as Indian markets came under heavy selling pressure.
Trump issued new warnings to Iran on Friday, threatening military action if the country refuses to “better negotiate a fair deal.”
According to AFP, the aircraft carrier USS Gerald R. Ford entered the Mediterranean Sea on Friday after being ordered to do so by US President Donald Trump as part of a significant military build-up in the Middle East. The aircraft carrier was spotted sailing through the Strait of Gibraltar, which connects the Atlantic Ocean to the Mediterranean Sea.
3) US markets
Domestic markets will take cues from Wall Street’s performance. On Friday, frontline US indices closed on a subdued note. The Dow 30 closed at 49,359, down 83 points or 0.17%, while the S&P 500 closed at 6,940, down 5 points or 0.06%. The Nasdaq Composite also finished marginally lower, falling 14.63 points, or 0.06%, to 23,515.40.
This week, however, US markets posted gains. The Dow Jones rose 0.5%, or 231 points, to 49,626, while the S&P 500 rose 48 points, or 0.70%, to 6,909.51. The Nasdaq Composite climbed 0.90%, or 203 points, to 22,886.
Also read: Major tariffs disappeared, but Trump’s 10% global tariffs continue. What can you expect from the markets on Monday?
4) Crude oil
In the event of a war-like situation, crude oil prices are expected to rise due to possible supply disruptions. Any escalation in tensions could impact the Strait of Hormuz, a 33-kilometer-wide waterway that serves as a crucial artery for global energy supplies. Nearly 13 million barrels per day pass through the Strait, accounting for about 31% of global seaborne crude oil trade.
US WTI crude last traded at $66.31 per barrel on COMEX, down $0.09 or 0.14%, while Brent settled at $71.76, up $0.02 or 0.03%.
5) BE/DII action
Friday’s data showed that foreign institutional investors (FIIs) sold Indian shares worth Rs 934.61 crore, while domestic institutional investors (DIIs) were net buyers at Rs 2,637.15 crore.
While FII flows have remained positive in February so far, sustained inflows will be crucial for benchmark indices to end the month on a strong note and possibly defy the usual negative seasonality.
6) IPO watch
Three motherboard IPOs will collectively raise Rs 4,063 crore this week, indicating a busy schedule for the primary market. The line-up includes sustainable energy player Clean Max Enviro Energy Solutions, jeweler PNGS Reva Diamond Jewelery and technical solutions provider Omnitech Engineering.
In addition, six SME issues will come to market, taking the total fundraising in the motherboard and SME segment to nearly Rs 4,300 crore.
The planned SME IPOs include Shree Ram Twistex (Rs 110.24 crore), Kiaasa Retail (Rs 69.72 crore), Accord Transformer and Switchgear (Rs 25.59 crore) and Mobilize App Lab (Rs 20.10 crore).
Also read: FIIs turn buyers in February with equity inflows worth Rs 16,912 crore. Is this a sign of trend reversal?
7) Technical triggers
Deciphering the technical setup, Bajaj Broking said the index formed a moderately strong bullish candle with a higher shadow on the daily chart, indicating a recovery from lower levels even as selling pressure continued at the higher zones. The Nifty continues to trade below its 21-, 50- and 100-day EMAs, with the next major and reliable support seen near the long-term 200-day EMA, around 25,250 points.
“In the near term, the index is expected to consolidate within a broad range of 25,000-26,000, maintaining a sideways bias. Volatility remained high, with the India VIX spiking amid continued geopolitical concerns. On the downside, immediate support is seen at 25,350, followed by 25,200, which is closely aligned with the 200-day EMA and could act as a crucial cushion. On the upside, Resistance lies at 25,650 and 25,720, with any pullback to higher levels likely to trigger selling pressure,” the brokerage said.
8) Rupee vs Dollar
The rupee fell 26 paise on Friday to settle at 90.94 against the US dollar, tracking the strength of the US currency against major peers and rising crude oil prices amid escalating US-Iran tensions. At the interbank forex market, the rupee opened at 90.94 and fell to an intraday low of 91.04 before closing at 90.94, marking a sharp fall of 26 paise from the previous close.
Earlier this week, the rupee had risen by 4 paise to reach 90.68 on Wednesday. The forex market remained closed on Thursday due to Chhatrapati Shivaji Maharaj Jayanti.
“Technically, the USDINR spot has broken out on the upside after a two-week consolidation phase between 90.40 and 90.80. Immediate support is now seen at 90.80, while resistance is stuck at 91.10 and 91.40,” said Dilip Parmar, research analyst at HDFC Securities.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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