The Indian stock market extended losses on Tuesday, with
and
trading flat with marginal losses despite a fall in
following reports of mediation efforts between the US and Iran.
Sensex dropped nearly 59 points to 77,650, while Nifty 50 dropped over 22 points at 24,216 on Tuesday. Broader markets, however, edged higher, with Nifty Midcap 100 and Nifty Smallcap 100 opening with marginal gains.
, Axis Bank, Eternal,
, HCL Technologies, M\&M, SBI and Trent shares dropped nearly 1-2% to lead losses on Sensex, while UltraTech Cement, ICICI Bank, Maruti Suzuki, NTPC, IndiGo and ITC shares rose around 1-2% to lead gains on the benchmark index.
Sectoral trends were also muted, with Nifty Financial Services, Nifty PSU Bank, Nifty IT, Nifty Private Bank and few other indices opening in the red with marginal losses. The overall market breadth was however positive, with NSE seeing 1,453 advances and 775 declines, while 147 stocks remained unchanged.
Iran-US mediation efforts
Iran had received a proposal from mediators for a 10-day ceasefire in efforts to salvage an interim deal signed on June 17, a senior Iranian official told Reuters. This intended to pave the way for a lasting agreement to end the raging conflict that began on February 28 with US-Israeli attacks on Iran that killed the latter’s former supreme leader.
Notably, while mediation efforts are boosting market sentiment, caution is still warranted. Yemen's Iran-aligned Houthis on Monday said that they would impose a naval blockade on Saudi Arabia, opening a potential new front against the US in its war with Iran and raising the threat to global energy supplies and trade beyond the Gulf.
Oil prices dipped below $90 per barrel after the reported mediation efforts. Brent crude futures were trading near $88 per barrel, while WTI Crude futures were at $82 per barrel.
What lies ahead?
In the near-term the market will be unduly influenced by the trends in crude price, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. Even though the softening of the Brent crude to about $88 level is a positive sign, the uncertainty is so huge that there an upside risk to crude price, he noted, adding that this will weigh on markets.
“The FPI selling is not large enough to impact the market. It is easily getting absorbed by DII buying. There is good news on the progress of the Khrif sowing with the sowing deficiency declining to 6%. The dollar inflows through the concessional swap facility has gone above $20 billion and is showing a healthy uptrend. This is positive for the rupee,” the analyst said.
A significant market trend is the outperformance of the broader market, Vijayakumar said, adding that this trend may continue in response to Q1 results.
Technical view on Nifty
From a technical perspective, the Nifty remains in a consolidation-to-corrective phase as long as it trades below the crucial 24,300-24,400 resistance zone, which also coincides with its 200-day EMA, said Rajesh Palviya, Head of Research at Axis Direct.
He noted that the Immediate support for the benchmark index is placed at 24,100, and a breach of this level could accelerate the decline towards the psychologically important 24,000 mark. On the upside, a decisive move above 24,400 would improve near-term momentum and pave the way for 24,500-24,600, he added.
“Going forward, the trajectory of crude oil prices,
earnings and
are likely to dictate market direction, while any moderation in oil prices or easing of regional tensions could provide the much-needed catalyst for a recovery in sentiment,” according to Palviya.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)