Indian stock markets opened flat but positive. Experts remain cautious due to a weakening rupee, driven by FPI outflows. The RBI intervened heavily to support the rupee after it crossed 91/USD. Key support levels for Nifty and Bank Nifty are watched.
Indian stock markets opened on a flat but slightly positive note on Wednesday. At 09:21 a.m., the BSE Sensex stood at 84,743.28, a rise of 63.42 points or 0.07 per cent. At the same time, NSE Nifty50 stood at 25,898.05, showing a gain of 37.95 points or 0.15 per cent.
Market Mood Cautious Amid Rupee Weakness
While the market started in green, experts say that a sharp fall in the value of the rupee and continuous selling by investors make the mood cautious. Banking and Market expert Ajay Bagga noted that the pressure on market is because of weak rupee, which falls because foreign money leaves the country. He said, "Indian markets are seeing pressure due to the weakening rupee, which is due to the continued FPI outflows and weak FDI inflows." He noted that the rupee recently crossed the important level of 91 rupees per dollar.
RBI Intervenes to Support Rupee
At the time of filing this report, rupee has recovered sharply, by over a per cent and trading at 90.14 against USD. "RBI intervened heavily with all its power today after opening at 91.07. Spot corrected from 91.07 to 89.98 in a matter of 4 minutes. Huge move. The intervention came in exactly after the 5 billion swap deal done yesterday by RBI. Now trading at 90.10," said K N Dey, currency expert.
Global Cues and Domestic Headwinds
Ponmudi R, CEO of Enrich Money, said, "Global markets continue to trade with caution amid lingering uncertainty over the US interest-rate trajectory." He noted that mixed signals from the United States regarding jobs and retail sales kept the risk appetite low. He observed that Asian markets also traded with mixed results as investors waited for important policy news, such as a possible interest rate hike by the Bank of Japan.
On the situation in India, Ponmudi echoed Bagga's sentiments, noting that foreign investors selling and a weak rupee are the main problems. "On the domestic front, persistent FII selling and continued weakness in the rupee remain key near-term headwinds," he noted. However, he also mentioned that steady money coming from local investors through monthly investment plans helped to stop the market from falling too much.
Technical Levels to Watch
Regarding the price trends, Ponmudi R said that the Nifty index looked mildly weak for the short term. It traded below a key average level of 25,950, which now acts as a ceiling. He said that the focus is on the support zone between 25,700 and 25,800. He believes that as long as this area holds, any further drop stays limited.
For the Bank Nifty, he noted that it showed weakness after closing below its recent average. He stated, "Immediate support is placed in the 59,000-58,800 zone." He suggested that the trend remains within a range with a small risk of going down.
Key Events on the Horizon
Bagga listed key events to watch this week which will have its impact on Indian markets, including meetings of central banks in the US, Europe, and Japan. He also spoke about global politics and mentioned that "Trump has imposed a barricade on Venezuela."
Divergence in Primary and Secondary Markets
Bagga highlighted a big difference between the primary market for new shares and the secondary market. He said, "Primary markets saw a massive IPO from an AMC company getting subscribed over 30 times. The Primary and secondary markets seem to be on different planes, but with lottery ticket investing in IPOs for listing gains, secondary markets are seeing liquidity outflows." (ANI)
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