The Indian equity market witnessed heightened volatility today as the Nifty opened with a significant gap down following escalating geopolitical tensions due to the recent U.S. military strike on Iran. Despite the initial shock, the index managed to stabilize, protecting the prior day’s low and forming a resilient green candle on the daily charts. Let’s break down the market action, technical levels, derivative data, and what traders should watch for in the coming sessions.
Global Backdrop: U.S. Attack on Iran Shakes Markets
Overnight news of the U.S. launching airstrikes on key Iranian sites created ripples across global financial markets. Oil prices surged on fears of supply disruptions through the Strait of Hormuz, while safe-haven assets like gold and the dollar strengthened. Asian markets opened weak, reflecting nervousness and risk aversion.
India’s Nifty was no exception, as it gapped down sharply at the open. However, the resilience of domestic investors, aided by bargain hunting and institutional buying near key support levels, helped it recover much of the lost ground.
Opening Moves: Gap Down but No Panic Sell-Off
The Nifty opened below the psychological 24850 level but crucially protected the prior day’s low. Initial trades saw some follow-through selling, but the intensity of the decline was limited. Buyers emerged around 24820, which acted as immediate support, in line with short-term Fibonacci retracement zones and prior consolidation areas.
Key highlights from the opening:
-
The Nifty opened approximately 150 points lower, reacting to overnight global cues.
-
The index found support near 24820, showing that dip buyers were active.
-
A gradual recovery ensued, with the index forming higher lows on the intraday chart.
Technical Setup: 24820 Support, 25050 Resistance
On the technical front, the index’s ability to protect its prior low and form a green candle post-gap down is a positive sign. This pattern indicates absorption of selling pressure and the presence of strong hands supporting the market at lower levels.
Important levels to track:
-
Immediate support: 24820 — A break below this could lead to a test of 24700/24650 zone.
-
Resistance: 25050 — Sustained move above this could lead to fresh momentum towards 25200 and higher.
The Nifty 50’s hourly chart also shows that the index is attempting to form a base around 24820-24850, with positive divergence visible on some momentum indicators like RSI and MACD.
Derivatives Data: Big Players Eye 25000
The derivatives data offers crucial insights into the market mood:
-
25000 short straddle: Big players have written significant open interest in both calls and puts at 25000, indicating expectations of consolidation in the short term.
-
PCR (Put-Call Ratio): The PCR remains near neutral, suggesting a balanced market without excessive bearish or bullish positioning.
-
FII activity: Foreign institutional investors were seen covering shorts and adding index futures in small quantities, indicating cautious optimism.
Options data suggests that traders expect the Nifty to oscillate between 24800 and 25200 in the near term, barring fresh geopolitical shocks.
Time Cycles & Intraday Timing
Time analysis points to Nifty time turning positive around 2:30 PM. This aligns with patterns seen during previous geopolitical risk days, where markets stabilized and saw buying in the last hour as fear subsided.
Traders observed that after the initial volatility:
-
Intraday charts turned constructive post 1:30 PM.
-
Volumes increased with buying in heavyweights like Reliance, HDFC Bank, and Infosys.
-
Bank Nifty mirrored Nifty’s recovery, showing strength in private sector banks.
What’s Driving the Support? Domestic Factors at Play
While global jitters weighed at the open, several domestic factors supported the index:
-
Q1 earnings season optimism: Expectations of strong results from IT and select banking names are cushioning downside.
-
GST collection data: Better-than-expected GST numbers provided some macro stability.
-
Rupee resilience: Despite global turmoil, the Indian rupee held relatively firm, reflecting stable external accounts.
Reliance Industries Ltd (NSE: RELIANCE) also played a key role, rebounding smartly from early lows and supporting index recovery. Reliance’s weight in the Nifty makes its performance crucial during volatile sessions.
Sector Highlights: Mixed Trends Across the Board
-
IT stocks: Defensive IT names attracted buying, given their relative insulation from geopolitical risks and dollar strength.
-
Banking stocks: After initial weakness, private banks saw short covering and fresh buying in afternoon trade.
-
Oil & gas: ONGC, Oil India gained on surging crude prices, while OMCs like HPCL and BPCL remained under pressure.
Investor Sentiment: Cautious But Not Panicked
Retail investors and HNIs appear cautious but not in panic mode. The quick absorption of selling pressure near support zones suggests that many see any further dips as buying opportunities rather than signals to exit.
Mutual funds were reportedly net buyers, focusing on large caps and defensives.
What to Watch Going Ahead
The following factors will dictate Nifty’s next move:
-
Developments on the US-Iran front: Any escalation could trigger fresh selling globally.
-
Crude oil price movement: Sustained spikes could stoke inflation worries and hurt import-heavy economies like India.
-
Global markets reaction: The overnight cues from US markets and Asian peers will set the tone.
-
Domestic earnings and macro data: Results from Reliance, HDFC Bank, and TCS will be key in the next leg of the move.
Strategy for Traders
Given the current setup:
-
Positional traders: May consider accumulating on dips around 24820-24850, with stop loss at 24650.
-
Intraday traders: Can look for long opportunities if Nifty sustains above 25000 with momentum in large caps.
-
Options traders: Could consider short straddles or strangles around 25000 strike, given the expected consolidation band.
Conclusion: Nifty Shows Resilience Amid Global Storm
Today’s session reflects the Nifty’s strength and the underlying confidence in India’s macro fundamentals, even amid external shocks. The gap-down open was a knee-jerk reaction, but the market’s ability to form a green candle signals that bulls are far from defeated.
Reliance Industries and other index majors are expected to lead the charge if stability returns on the geopolitical front. As always, prudent risk management and close tracking of key levels like 24820 (support) and 25050 (resistance) are essential.
ALSO READ: Stock Market Today: Nifty, Sensex, Bank Nifty Fall
