Indian equity markets are anticipated to start the trading session on a firm note this Friday, drawing strength from a slight rebound in the domestic currency and cautiously optimistic signals from global peers. This positive setup follows a period of volatility, offering a glimmer of stability to investors.
Rupee's Mild Rebound and Global Market Support
The Indian rupee showed signs of resilience, appreciating by 5 paise to settle at 83.54 against the US dollar in the previous session. This mild recovery from recent pressures is a key factor lending support to market sentiment. A stable rupee is crucial as it alleviates concerns related to foreign fund outflows and import costs.
Concurrently, major global indices presented a mixed but largely steady picture. In the United States, the Dow Jones Industrial Average managed to close in positive territory. Asian markets, including Japan's Nikkei and Hong Kong's Hang Seng, were also trading with modest gains in early hours, providing a constructive backdrop for the Indian market opening.
Key Domestic and International Factors in Play
Market participants will be closely monitoring several critical variables that could influence the day's trajectory. The behaviour of Foreign Institutional Investors (FIIs) remains a focal point, as their trading activity significantly impacts liquidity and direction. Recent sessions have seen notable selling pressure from FIIs, and any shift in this trend will be watched closely.
On the global front, the movement of Brent crude oil futures is under scrutiny. Oil prices are a significant determinant of India's macroeconomic health, affecting the current account deficit and inflationary pressures. Any sharp uptick can dampen sentiment, while stability or a decline is viewed favorably.
Additionally, the overall global risk appetite will play a decisive role. Investor sentiment worldwide, shaped by geopolitical developments and central bank policies, often cascades into emerging markets like India.
Previous Session's Performance and Outlook
In the last trading session, benchmark indices had closed with minor losses after a volatile day. The Sensex declined by 45 points to settle at 72,952, while the Nifty dipped 5 points to close at 22,153. The market's ability to hold above key support levels despite negative global cues was noted by analysts.
For the day ahead, experts suggest that while the opening is likely to be firm, sustained upward movement will depend on follow-through buying interest, particularly from domestic institutions. The market may continue to trade in a range, with specific sectors reacting to stock-specific news. Traders are advised to watch for momentum in banking and IT stocks, which have a heavy weighting on the indices.
In summary, a combination of a recovering rupee and a lack of negative triggers from global markets sets the stage for a positive start. However, the durability of the gains will hinge on fresh inflows and broader risk sentiment as the trading day progresses.
