Indian markets recover in early trade amid falling crude oil prices

Indian stock markets opened low on Tuesday but recovered in early trade, buoyed by a significant drop in crude oil prices. However, caution prevails among investors due to weak signals from Asian markets and ongoing global tech stock concerns.

Indian benchmark indices opened on a subdued note on Tuesday before recovering in early trade, supported by easing crude oil prices. However, weak cues from most Asian markets kept investor sentiment cautious. The BSE Sensex opened 34.69 points lower at 76,801.09, while the NSE Nifty 50 slipped 3.55 points to 23,992.40 before both benchmark indices edged into positive territory in early trade.

Commodity Prices Ease

Brent crude fell 0.84 per cent to USD 87.20 per barrel, dropping below the USD 88 mark, while WTI crude declined 0.63 per cent to USD 81.51 per barrel. Gold prices also eased 0.59 per cent to USD 4,048.75.

Positive Catalysts for Market Recovery

VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said several positive factors could help sustain the ongoing market recovery, though intermittent bouts of profit booking and corrections are likely.

"There are many positive factors that have the potential to sustain the mild rally in the market. The rally is unlikely to be consistent and steady. There will be occasional profit booking and corrections," he said.

According to Vijayakumar, the sharp correction in Brent crude prices to around USD 87 per barrel is a major positive for both market fundamentals and investor sentiment. He also pointed to the improving monsoon, with the rainfall deficit narrowing to 15.4 per cent, as another supportive factor.

He added that the June quarter earnings announced so far indicate an earnings revival, while robust credit growth of around 18 per cent and healthy volume growth in sectors such as automobiles are providing additional support to the market. On the global front, he said the weakening of the chip trade is also favourable for India.

Global Cues and Technical Levels

Vikram Kasat, Head Advisory, PL Capital, said that while lower oil prices are supporting market sentiment, concerns surrounding the artificial intelligence-driven chip trade continue to weigh on global technology stocks.

"All three major US indexes opened solidly higher on Monday as oil prices retreated amid a pause in U.S. strikes in Iran. However, the gains did not hold as worries surrounding artificial intelligence overshadowed the energy market. Chip stocks, in particular, came under heavy selling pressure, dragging the tech-heavy Nasdaq lower," Kasat said.

He said Nifty's immediate technical support is placed at 23,830, while resistance is seen at 24,230.

Asian Markets Mostly in Red

Across Asia, Japan's Nikkei 225 declined 3.89 per cent, South Korea's KOSPI fell 10.19 per cent, Taiwan Weighted dropped 4.29 per cent, and GIFT Nifty was down 0.14 per cent. Hong Kong's Hang Seng, however, traded marginally higher by 0.02 per cent.

Mixed Close for US Markets

Overnight, US markets closed on a mixed note. Dow Jones Futures eased 0.76 points, while the Nasdaq fell 0.18 per cent. The S&P 500 ended 0.02 per cent higher.

Technical Outlook and Investor Strategy

Shrikant Chouhan, Head Equity Research, Kotak Securities, said, "We believe the pullback rally is likely to continue as long as the Nifty sustains above 23,800 (Sensex: 76,300). On the upside, the index could retest its 20-day Simple Moving Average (SMA) placed around 24,100-24,150 (Sensex: 77,000-77,300)."

He added that a break below the 23,800 level could trigger fresh selling pressure, with the Nifty potentially declining towards the 23,700-23,600 range.

Chouhan also advised investors to use the ongoing pullback to reduce weak long positions and consider selective buying on declines near the 23,800-23,700 support zone.

Markets are expected to remain focused on global developments, crude oil price movements and the ongoing corporate earnings season for further direction. (ANI)

(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)