US Stocks Plunge, GIFT Nifty Dropped Nearly 100 Points. How will the stock market react on Tuesday?

Indian stock markets are likely to open lower on Tuesday after global cues turned weak overnight with US stocks falling sharply and GIFT Nifty indicating a negative start. GIFT Nifty was trading nearly 100 points lower late Monday, indicating that benchmark indices Sensex and Nifty could start the session under pressure.The cautious sentiment follows a sharp decline on Wall Street, where major US indexes fell more than 1% on Monday as geopolitical tensions rose in the Middle East and oil prices soared.

Investors turned risk averse after crude oil prices briefly rose close to $120 a barrel on fears of supply disruptions. The rise in energy prices has revived concerns about inflation and the risk of stagflation in major economies.Geopolitical tensions further escalated after Iran appointed Mojtaba Khamenei, son of the late Ali Khamenei, as the country’s new supreme leader, signaling a consolidation of power among hardliners in Tehran. The conflict in the Middle East has now entered its tenth day.

Oil prices later fell slightly after governments, including members of the Group of Seven and Saudi Arabia, began discussions on ways to increase supply and prevent further spikes in energy prices.

However, analysts warn that crude oil markets could remain volatile as geopolitical developments continue to push prices higher.

Maulik Patel, head of research at Equirus Securities, said oil markets are currently trading on geopolitical risk premia rather than demand fundamentals. We believe that crude oil markets have entered a geopolitical risk premium phase, with prices increasingly driven by security of supply concerns rather than underlying demand fundamentals. The ongoing conflict between the US, Israel and Iran and the disruption around the Strait of Hormuz have significantly tightened the near-term supply outlook and pushed crude above $100 per barrel for the first time since. 2022,” Patel said.

“If the war lasts longer and volumes through the Strait of Hormuz are restricted, oil prices could rise significantly from current levels, with demand destruction becoming the only factor that can lower prices,” he added.

Technical outlook for Tuesday

From a derivatives perspective, the Nifty appears to be trading within a range as investors remain cautious amid global uncertainty. Hitesh Tailor, research analyst at Choice Equity Broking, said options data currently points to a range-bound market.

“In the derivatives market, significant put writing at the 23,800 strike and aggressive call writing at the 24,400 strike indicate that the market currently has a well-defined trading range,” he said. “Traders should remain cautious near key support levels and avoid new directional trades until a decisive break above the resistance zone confirms a clearer trend.”

Analysts also expect volatility to remain high in the short term given the uncertain geopolitical backdrop.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the broader market structure remains weak but technically oversold. “We believe the current market texture is weak but oversold. For day traders, 24,000-23,900 would act as key support zones,” he said.

“If the market remains above these levels, we could see a decline towards 24,150-24,300. On the other hand, if Nifty falls below 23,900, selling pressure may increase and the index may retest at 23,700.”

Chouhan added that a deeper correction cannot be ruled out if global signals deteriorate further, with Nifty possibly drifting towards the 23,500 zone in the near term.

For now, traders are likely to remain cautious as global developments, especially crude oil prices and geopolitical tensions, continue to dictate the near-term direction of equity markets.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of Economic Times)