MARKET SUMMARY
Indian benchmarks Nifty and Sensex are expected to open around 200 points higher, influenced by the significant India-US trade deal that has reduced tariffs from 50% to 18%. This development enhances export visibility and renews interest from foreign institutional investors. Nifty is likely to test the 25,800–26,000 resistance early, while Bank Nifty focuses on 60,800 following consolidation near 25,600 after last week’s range-bound activity.
KEY DRIVERS
– India-US Trade Pact: This agreement removes a major obstacle, improves export growth prospects, and counters global weakness stemming from a US tech sell-off and soft jobs data. The VIX has dipped to 11.94, indicating reduced fear.
– Global Cues Mixed: The US Dow (-1.20%), DAX (-0.46%), and Nikkei (-0.93%) are approaching support levels, but the Gift Nifty’s +0.15% increase and declining US yields (10-year at 4.18%) offer hope for a rebound. SGX Nifty remains above the key support of 25,600.
– Institutional Flows: Foreign institutional investors have been net buyers with approximately ₹700 crore in February, though volatile. Domestic institutional investors maintain steady inflows of over ₹4,000 crore, providing support during market dips. Watch for foreign institutional investors’ reactions to the trade news.
– RBI Policy Aftermath: Unchanged rates and a balanced stance helped maintain last week’s hold at 25,700. Ongoing earnings reports from banks, metals, and infrastructure sectors contribute to stock-specific movements.
SECTORS TO WATCH
Bullish: IT/Tech (due to potential US recovery), Exports/Manufacturing (boost from trade deal), Banking (Bank Nifty stronger at 60,120, targeting 61,700 if it stays above 59,500).
Cautious: Mid/small-caps (volatile near highs), Metals (earnings volatility).
EVENTS
The outcomes of the RBI MPC meeting are being digested today, with a focus on their stance. Key earnings reports are expected, as well as the UK BOE Minutes at 17:30 IST and ECB data at 18:45 IST, which may have global implications. The USDINR is ranging between 90 and 91.
RISKS
– If Nifty fails to hold at 25,500/25,350 or Bank Nifty at 59,500, a slide to 25,000/58,800 could occur amid swings in foreign institutional investor activity and weakening global supports, such as Dow at 48,000.
– There may be increased volatility from earnings and policy digestion during this post-event lull.
CLOSING NOTE
Capitalize on the gap-up momentum. Stay flexible around the 25,500 support for intraday trades, with the trade deal providing a slightly bullish outlook.