India-Pakistan conflict: Gift Nifty down 311 pts; How stock market will react today?

Indian benchmark indices are starting at a gap-down start on Friday amid the rising conflict with Pakistan in the bordering states. Later Thursday, Indian air defence successfully stroked-down missile and drone attacks by Pakistan. On the other hand, cues from the global stocks remain supportive on the Trump tariff front.

Nifty futures on the NSE International Exchange traded 311.40 points, or 1.27 per cent, lower at 23,960, hinting at a negative start for the domestic market on Friday. On the contrary, Asian-Pacific stocks rose on Friday amid global optimism on tariff deals. Nikkei and DJ surged more than a per cent each, while AXS 200 and Hang Seng also inched up. KOSPI was seen in red.

Volatility spiked, with India VIX rising to high of 21.01, reflecting investor nervousness amid ongoing geopolitical developments, said Siddhartha Khemka, Head - Research at Motilal Oswal Financial Services. "Looking ahead, market volatility is expected to persist as investors track further developments on the India-Pakistan front and US trade announcements," he said.

The dollar headed for a weekly gain on most major peers on Friday as a US-UK trade deal raised hopes of progress in looming US-China talks, while bets of imminent U.S. rate cuts receded after the Federal Reserve indicated it was in no hurry. Bitcoin has surged back above $1,00,000, reflecting a refreshed appetite for risk-taking in markets' more speculative corners.

Wall Street stocks settled higher on Thursday amid positive news flow on Trump tariffs. The Dow Jones Industrial Average rose 254.48 points, or 0.62 per cent, to 41,368.45; the S&P 500 gained 32.66 points, or 0.58 per cent, to 5,663.94; and the Nasdaq Composite surged 189.98 points, or 1.07 per cent, to 17,928.14.

Provisional data available with NSE suggest that FPIs turned net buyers of domestic stocks to the tune of Rs 2,007.96 crore on Thursday. On the other hand, domestic institutional investors (DIIs) turned net sellers  of Indian equities to the tune of Rs 596.25 crore.

"The Indian equity market experienced profit booking due to escalating tensions between India and Pakistan, marked by increased cross-border exchanges. The FOMC policy meeting provided little reassurance, as the FED expressed concerns that aggressive U.S. tariffs could fuel inflation and raise unemployment, said Vinod Nair, Head of Research at Geojit Investments.

"However, the global market remains stable and positive, buoyed by expectations of an imminent US trade deal with the UK and preliminary indications of trade talks with China. Historically, the domestic volatility is expected to neutralize as cross border issues de-escalates," he said.

Nifty outlook
Nifty50 closed with a Dark Cloud Cover candlestick pattern, indicating heightened fear among traders. Prior to this, the index faced resistance around 24,550, said Rupak De, Senior Technical Analyst at LKP Securities. "The near-term sentiment appears weak, with the potential for further correction in the short term," he added.

As long as the market is trading below 24,450/80,900, the weak sentiment is likely to continue. On the downside, it could retest the levels of 24,150-24,100/80,000-79,700, said Shrikant Chouhan, Head-Equity Research at Kotak Securities. "Above 24,450/80,900, the sentiment could change. The current market texture is non-directional; hence, level-based trading would be the ideal strategy for short term traders," he said.

Nifty Bank outlook
Om Mehra, Technical Research Analyst, SAMCO Securities said that Nifty Bank formed a bearish candle on the daily chart, while the hourly chart indicates a lower low and lower high formation. The sharp decline in the dying hours has weakened the short-term trend. "Nifty Bank appears poised for a healthy consolidation, which could help establish a solid support base before its next leg on the higher side," he said.

Key observation is that the last 10 sessions consolidation is inside a channel, said Bajaj Broking. "We expect it to extend the consolidation in the range of 53,000-56,000, working off the overbought conditions created by the recent sharp rally. On the downside, key support is seen between 53,000-53,500 levels being the previous major breakout area and previous gap up area."