Indian stock market may open weak amid Asia sell-off and rising geopolitical tensions
AI Summary
Indian markets are expected to open weakly, reflecting a negative sentiment from Asian markets, particularly Japan and South Korea, due to rising crude oil prices and geopolitical tensions in the Middle East. Despite a positive close on Wall Street following softer U.S. inflation data, investor caution prevails as the IMF warns of potential risks to global energy supplies and economic growth. The derivatives market shows strong support at the 24,000 strike, but significant overhead supply at 24,200, indicating a cautious trading environment ahead.
Indian markets are likely to see a weakness at open amid a gloomy mood across global markets. Though the US stocks closed in the positive, equities across Asia Pacific region are down sharply, especially Korea’s Kospi and Japan’s Nikkei, as crude oil prices remained firm following unease in West Asia.
Gift Nifty at 24,095, signals a marginally negative start.
Ponmudi R, CEO of Enrich Money, said global cues remain mixed. Wall Street ended higher overnight after softer-than-expected U.S. inflation data reinforced expectations that the Federal Reserve may adopt a less hawkish monetary policy stance. A stronger-than-expected start to the US earnings season also supported investor sentiment, he said.
“ In contrast, Asian markets are trading sharply lower, with Japan’s Nikkei 225 declining more than 3% and South Korea’s Kospi falling over 6% in early trade, reflecting renewed concerns over the escalating Middle East conflict and its potential impact on global growth,” Ponmudi said further.
Adding to investor concerns, the International Monetary Fund (IMF) has warned that prolonged disruptions in the Middle East could pose significant risks to global energy supplies and economic growth. With crude oil prices remaining elevated and geopolitical risks continuing to dominate market sentiment, investors are expected to remain cautious in the near term., he added.
However, investors are likely to refrain from taking aggressive directional positions until there is greater clarity on the evolving geopolitical situation, he opined.
On the derivatives front, India VIX declined 3.49% to 13.27, indicating easing volatility, while the PCR slipped to 0.77, reflecting a cautious undertone as call writers remained active at higher strikes.
“Option chain data shows maximum Put Open Interest at the 24,000 strike, followed by 23,800, reinforcing a strong support base, whereas maximum Call Open Interest is concentrated at the 24,200 strike, followed by 24,500, highlighting significant overhead supply,” said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities
Original Article
Published on Hindu BusinessLine