GIFT Nifty Drops 129: Asian Markets, Oil, Dollar, and More

As the new week begins, GIFT Nifty and other domestic benchmark indices are poised for a gap-down opening due to escalating geopolitical tensions between Israel and Palestine. This conflict in the Middle East has ignited a surge in crude oil prices, prompting traders to seek refuge in safe assets such as bonds and the dollar. While most Asian markets are observing a public holiday, the US markets opened with gains from overnight trading. Investors are eagerly anticipating the upcoming Q2 earnings season. Here’s what you need to know before the Opening Bell:

Nifty Outlook:

Ashwin Ramani, a Derivatives & Technical Analyst at SAMCO Securities, notes that Nifty has achieved consecutive higher closes on the daily chart, signaling a trend reversal. It has closed above the 50-day Exponential Moving Average (DEMA) of 19,559 and touched the 38.2 percent Fibonacci retracement level of 19,673, calculated from the high of 20,222. The support for Nifty now shifts to 19,600 after this strong closing.

Nifty Bank Outlook:

Regarding Nifty Bank, a key support zone lies at 44,000. It may rally toward the 50-day Simple Moving Average (SMA) at levels of 44,800-45,000. However, if Nifty Bank falls below 44,000, the uptrend could be at risk, warns Athawale, Vice President for technical research at Kotak Securities.

GIFT Nifty Signals a Negative Start:

GIFT Nifty futures on the NSE International Exchange traded 129 points, or 0.65 percent, lower at 19,641, indicating a negative start for the domestic market on Monday.

Most Asian Markets Closed Today:

On Monday, most Asian markets observed a holiday. Among those that were open, several witnessed declines due to the ongoing clashes in the Middle East involving Hamas. The MSCI’s broadest index of Asia-Pacific shares outside Japan inched up by 0.18 percent. Japan’s Nikkei fell by 0.10 percent, while Australia’s ASX 200 gained 0.51 percent. New Zealand’s DJ declined by 0.74 percent, China’s Shanghai dropped by 0.54 percent, Hong Kong’s Hang Seng surged by 1.88 percent, and South Korea’s Kospi rose by 0.14 percent.

Oil Prices Surge Amid Middle-East Violence:

Oil prices surged by over $4 a barrel in early Asian trade on Monday due to the dramatic military clashes between Israeli and Hamas forces, intensifying political uncertainty across the Middle East. Brent crude rose by $4.18, or 4.94 percent, to $88.76 a barrel, while US West Texas Intermediate crude reached $87.02 a barrel, up by $4.23, or 5.11 percent.

Dollar Gains on Flight to Safety:

Amid the Middle East violence, the safe-haven dollar and Japanese yen saw gains on Monday. Additionally, a robust US jobs report further bolstered the greenback. The dollar index was last seen at 106.21, up by 0.11 percent. The Japanese yen was trading at 149.19 per dollar. Against the dollar, the euro fell by 0.2 percent to $1.0565, while sterling slipped by 0.1 percent to $1.2218.

Wall Street Stocks Settle Higher:

Following a strong US jobs report on Friday, Wall Street experienced a delayed rally. The data revealed a robust economy with moderating inflation, alleviating fears of higher interest rates that had previously driven up bond yields. The Dow Jones Industrial Average rose by 288.01 points, or 0.87 percent, to 33,407.58, the S&P 500 gained 50.31 points, or 1.18 percent, reaching 4,308.5, and the Nasdaq Composite added 211.51 points, or 1.6 percent, to 13,431.34.

Stocks in F&O Ban List:

The National Stock Exchange (NSE) has placed four stocks – Indiabulls Housing Finance, Delta Corp, Punjab National Bank, and Manappuram Finance – in the F&O segment ban list for Monday, October 7. Companies where derivative contracts exceed 95 percent of the market-wide position limit are included in the F&O segment ban.

FPIs Sell Shares Worth Rs 1,864 Crore:

Provisional data available from NSE suggests that Foreign Portfolio Investors (FPIs) were net sellers of domestic stocks, amounting to Rs 90.29 crore on Friday. In contrast, domestic institutional investors (DIIs) turned net buyers of Indian equities, with purchases totaling Rs 783.25 crore. In the first week of October 2023, overseas investors withdrew a total of Rs 7,998 crore from Indian equities.

Rupee Slips 2 Paise Against Dollar:

On Friday, the rupee declined by 2 paise to settle at 83.27 against the US dollar following the Reserve Bank’s decision to keep the repo rate unchanged in its fourth consecutive monetary policy review. Unrelenting foreign fund outflows and the elevated levels of the greenback weighed on the local unit, according to forex traders.