GIFT Nifty Signals Muted Open as CAS-Driven Jump Peaks; RBI Policy in Focus

GIFT Nifty Signals Muted Open as CAS-Driven Jump Peaks; RBI Policy in Focus​

Indian equity markets are poised for a measured start on Tuesday, despite Monday's significant rally. The implied opening from GIFT Nifty suggests a flat bias, likely trading below the high levels set during the newly introduced Closing Auction Session (CAS). Investors remain keenly focused on the Reserve Bank of India’s monetary policy announcement later this week and the ongoing June-quarter earnings season.

Market Performance on Monday's Close​

Indian equities extended their winning streak to four consecutive sessions on Monday, bolstered by broad-based sectoral buying. The Sensex rallied 544.4 points, or 0.7 percent, reaching 78,639. Concurrently, the Nifty surged 390.7 points, or 1.6 percent, finishing at 24,774.3.

The strong closing performance was influenced by the debut of the Closing Auction Session (CAS). According to NSE data, participation in the first CAS surpassed that of the pre-open session. The CAS saw 515 trading members placing orders for 56,773 unique PANs, compared to 403 members and 42,822 PANs in the pre-open session.

Global Cues Provide Support Amid Caution​

Global markets delivered a supportive backdrop after US equities started August on an uptrend. The Dow Jones Industrial Average surged 1.32 percent to a record closing high, while the S&P 500 climbed 1.48 percent and the Nasdaq Composite advanced 2.13 percent.

This rally followed indicators of de-escalation in the US-Iran conflict, which consequently drove down Treasury yields and boosted global investor confidence. Asian markets traded with a cautious yet positive bias after the Wall Street gains. MSCI's broadest index for Asia-Pacific shares outside Japan edged up 0.1 percent, led by South Korea’s gains of up to 2.1 percent.

Crude Oil Rebounds Slightly After Sharp Drop​

Crude oil prices recovered modestly following a steep decline in the previous session. Brent crude futures rose 0.7 percent to $84.39 a barrel, and US West Texas Intermediate crude gained 0.7 percent at $80.95.

The rebound occurred after Brent had tumbled 7 percent on Monday. This initial fall was attributed to eased concerns over prolonged supply disruptions as hopes for diplomatic progress between the United States and Iran were weighed. However, prices remain below last week’s highs despite the slight recovery.

Key Domestic Focus: RBI Policy and Earnings Season​

Investor attention is now shifting towards crucial domestic factors. The Reserve Bank of India's Monetary Policy Committee meeting will be closely watched for cues regarding interest rates, inflation, and growth projections. Commentary from management during the June-quarter earnings season will also drive stock-specific movements concerning margins and future demand.

Ponmudi R, CEO of Enrich Money, commented that the Nifty maintains a positive technical structure. He forecasts that a sustained move above 24,600 is necessary to strengthen bullish momentum. This could propel the index toward the 24,800-25,000 zone. On the downside, immediate support is anticipated at 24,500, followed by the 24,400-24,300 region.

CAS and Domestic Market Outlook​

The market will monitor the second day of the Closing Auction Session (CAS). The exchange noted that there was no sudden change in the index at 3:30 pm on Monday. This was because the index remained constant during the order collection period between 3:15 pm and 3:30 pm, while indicative values based on equilibrium prices were separately displayed.

GIFT Nifty indicated a subdued open for the Nifty 50 in the early morning, with its reading at 24,655 being 10 points lower from the previous session's close on the NSE IFSC. This implied opening was significantly lower than the official closing level of 24,774.3 determined by the auction mechanism.