GIFT Nifty Surges 100 Points, Signaling Strong Start for Indian Equities Amid Global Selloff and RBI Support

GIFT Nifty Surges 100 Points, Signaling Strong Start for Indian Equities Amid Global Selloff and RBI Support​

Domestic Strength Counters Global Turmoil as GIFT Nifty Previews Rally​

Benchmark indices Sensex and Nifty are set for a positive opening on Monday, buoyed by the performance of GIFT Nifty. This pre-market indicator showed gains, suggesting that domestic equities might outperform despite a significant selloff observed across global stock markets. Investors are anticipated to scrutinize the Reserve Bank of India's (RBI) recent policy measures designed to bolster foreign inflows and reinforce rupee stability.

GIFT Nifty traded at 23,195 in early trading, registering an increase of 98 points or 0.42 percent. This early strength contrasts sharply with Friday's close, where Sensex fell by 117 points and Nifty declined by 50 points after the central bank maintained a repo rate of 5.25 percent and upheld its neutral policy stance.

Rupee Appreciation Offers Crucial Domestic Support​

The rupee has delivered considerable stability to domestic sentiment. The Indian currency finished Friday at 94.95 per dollar, marking its largest appreciation in two months. This gain extends the rupee's winning streak to three consecutive weeks. These positive developments are attributed to the RBI unveiling specific measures intended to attract foreign currency inflows into the market.

However, this localized strength must be viewed against a backdrop of persistent global weakness. Asian markets experienced sharp declines on Monday following heavy selling in U.S. technology stocks and the resurfacing of geopolitical tensions in the Middle East. South Korea's KOSPI plunged over 6.8 percent, while Japan's Nikkei dropped 3.4 percent.

Global Markets Brace for Volatility Amid Geopolitical Headwinds​

Wall Street saw a steep decline on Friday, suffering its toughest drop in several months. Stronger-than-expected U.S. jobs data led to fears that the Federal Reserve might maintain high interest rates or even resume tightening measures. The Dow Jones Industrial Average fell 695 points, S&P 500 dropped 2.6 percent, and Nasdaq slumped more than 4 percent, ending its nine-week winning streak.

Crude oil prices moved higher following renewed hostilities between Israel and Hezbollah, raising concerns about the viability of a broader Middle East peace deal. Brent crude rose approximately 2.5 percent to above $95 per barrel, while WTI crude climbed over 2 percent to around $92.6 per barrel.

Market Cautiousness Prevails Amid Energy Risk​

Despite the positive indication from GIFT Nifty and domestic currency strength, experts advise caution regarding continued market momentum. Ponmudi R, CEO of Enrich Money, noted that renewed tensions between Iran and Israel have undermined hopes for a sustained ceasefire, reigniting concerns about global energy supplies. He pointed out that crude oil prices have climbed back into the $92-93 per barrel range, introducing fresh risks to India's import bill and inflation outlook.

The market is also expected to maintain elevated volatility due to weak global markets and ongoing foreign institutional selling. On June 5, foreign institutions were net sellers, offloading shares worth Rs 4,447 crore. Counterbalancing this was domestic institutional investors who purchased equities amounting to Rs 4,360 crore.

Technical Analysis Highlights Key Support and Resistance Zones​

From a technical perspective, the Nifty is facing immediate resistance within the 23,450-23,550 zone. However, the region spanning 23,150-23,250 remains a crucial support area for the index. For Bank Nifty, strong headwinds are observed in the 54,800 to 55,000 resistance band, with buyers finding solid footing between 53,800 and 54,000 as a key support level.