Will Nifty fall to 23,150 after gap-down opening? Anil Singhvi explains key levels

The Indian stock market is likely to open lower on Monday amid weak global cues and rising geopolitical tensions in West Asia.

GIFT Nifty indicated a sharp gap-down opening for domestic equities. Asian markets also traded lower in early deals after weakness on Wall Street last week.

The main trigger for the weak sentiment is the rising tension between the US and Iran. Investors are worried that the conflict may impact global crude oil supply and keep inflation risks high.

Crude oil prices surged above $111 per barrel after tensions escalated further over the weekend. Higher oil prices are negative for India as the country imports a large portion of its crude oil needs.

The sharp rise in oil prices also weighed on the rupee and increased concerns over inflation and fiscal pressure.

On Friday, the Indian stock market ended lower due to profit booking amid weak global cues. Rising crude oil prices and rupee weakness also hurt investor sentiment.

The Sensex declined 160.73 points, or 0.21 per cent, to close at 75,237.99. The Nifty 50 fell 46.10 points, or 0.19 per cent, to settle at 23,643.50.

Global markets remain under pressure

Global markets remained weak as investors turned risk-averse.

US stock markets ended sharply lower on Friday. All three major Wall Street indices fell more than 1 per cent amid fears of a further escalation in the US-Iran conflict.

Asian markets also slipped on Monday morning after there was no major progress over the weekend in reducing tensions between the two countries.

Both the US and Iran continued to maintain aggressive positions. This kept market sentiment weak across regions.

According to reports, Donald Trump warned Iran over delays in reaching a deal. He reportedly said time was running out and action may be taken if an agreement was not reached soon.

After Trump’s warning, reports of drone attacks in Saudi Arabia and the UAE further increased concerns in global markets.

Iran reportedly refused to bow to US pressure. Iranian state media also suggested talks between the two countries remain difficult.

Investors are now worried that prolonged tensions may keep crude oil prices elevated for a longer period.

Bond yields, dollar strength add pressure

Apart from crude oil, rising US bond yields and a stronger dollar also impacted market sentiment.

US bond yields climbed to around 4.6 per cent, which is a one-year high. Higher bond yields generally reduce investor appetite for risky assets like equities.

The dollar index also remained strong. A stronger dollar usually puts pressure on emerging market currencies, including the rupee.

Gold and silver prices also witnessed sharp declines. Metal prices globally remained under pressure due to risk-off sentiment.

Nifty may move towards 23,150

Technical indicators suggest the Nifty may continue to remain weak in the near term.

According to Zee Business Managing Editor Anil Singhvi, the Nifty may move towards the 23,150 level to fill an old gap created during the sharp rally in April.

The index had closed below the important 23,800 support level on May 12.

On April 7, before the ceasefire-related rally, the Nifty had touched a high of 23,153. The next day, on April 8, the market opened with a major upward gap and the day’s low stood at 23,828.

That gap has remained unfilled since then. Analysts believe the market may now move towards the 23,125–23,250 range to complete the gap-filling process.

Singhvi also noted that the Nifty had taken support near 23,262 earlier this month before witnessing a recovery.

On Friday, the index touched an intraday high of 23,839 before falling again.

Singhvi believe a close below 23,100 may trigger a fresh round of weakness in the market.

Bank Nifty support seen near 52,800

Bank Nifty is also showing signs of weakness.

The banking index had slipped below the key 54,200 support level earlier this month.

Before the April rally, Bank Nifty had touched a high of 52,778 on April 7. The next day, the index opened with a major gap-up move and the day’s low stood at 54,797.

That gap is still unfilled.

Singhvi believe Bank Nifty may now move towards the 52,800 zone to complete the gap-filling process and take support.

The index had earlier bounced back from around 53,194 this month. However, selling pressure returned after Bank Nifty touched an intraday high of 54,325 on Friday.

Singhvi now see strong support in the 52,600–52,800 range.

A close below 52,600 may increase downside pressure on banking stocks.

FIIs buying offers some support

Despite weak global cues, foreign institutional investors (FIIs) buying over the last two sessions may provide some support to the domestic market.

Investors will also closely watch ongoing quarterly earnings for stock-specific triggers during Monday’s session.