Stock market: Gift Nifty signals gap-up open, key levels for Nifty, Sensex & Nifty Bank

Indian equity benchmark indices are set for a strong gap-up opening on Tuesday, buoyed by the India–US trade deal, which is expected to attract foreign investor inflows. US President Donald Trump announced a trade deal with India that slashes US tariffs on Indian goods to 18 per cent from 50 per cent in exchange for India halting Russian oil purchases and lowering trade barriers.

Nifty futures on the NSE International Exchange traded 1,102.70 points, or 4.39 per cent, up at 26,244.50, hinting at a gap-up start for the domestic market on Tuesday. Asian stocks were on the rebound on Tuesday as trade took a calmer tone after wild swings in metals markets. KOSPI surged nearly 4.5 per cent, while Nikkei was up nearly 3 per cent.

India and the USA have finally signed the trade deal. The deal is a net win-win for everyone. Here are some interesting things we observed. India has always been very clear that it won't expose the dairy and agri sector. PM Modi has defended that stance and finally agreed with the US on buying energy from them worth $500 billion, said Shashank Udupa, SEBI registered RA and Fund Manager at Smallcase.

"Having a Deal today at such low tariffs cheaper than many of our Asian counterparts will surely boost our companies profits. We have basically secured 2 amazing trade deals in a span of 2 months - With the USA and EU. India is marching towards becoming a manufacturing first nation and these two deals cement that future for us," he added.

Wall Street stocks closed higher on Monday lifted by gains in chipmakers and other companies related to artificial intelligence, while smaller companies also rose sharply. The S&P 500 climbed 0.54 per cent to end the session at 6,976.44 points. The Nasdaq gained 0.56 per cent to 23,592.11 points, while the Dow Jones Industrial Average rose 1.05 per cent to 49,407.66 points.

Gold was up 3 per cent in the Asia morning to $4,800 an ounce, while silver traded 5 per cent higher to $83.34 an ounce. Currency markets were finding a level after last week's sharp spike lower in the dollar. The Indian rupee is set to rally sharply at open on Tuesday, supported by expectations that the US–India trade deal will draw foreign investors back.

Oil prices held steady on Tuesday as market participants weighed the possibility of a de-escalation in US-Iran tensions, with a firmer dollar limiting the upside. Brent crude futures were up 6 cents, or 0.1 per cent, at $66.36 per barrel. US West Texas Intermediate crude was at $62.24 per barrel, up 0.2 per cent.

Market sentiment improved as investors digested the implications of the Budget and turned to value buying in frontline stocks after the sharp correction, said Ajit Mishra, SVP of Research at Religare Broking. "Given the mixed signals and elevated volatility, participants are advised to maintain a selective, stock-specific approach and focus on disciplined, risk-managed trades."

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 1,832.46 crore on Monday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 2,446.33 crore on a net-net basis.
 

Nifty50 & Sensex outlook

Market has formed a promising reversal pattern, and on daily charts, it formed a bullish candle, which supports a further uptrend from the current levels. Now 25,000/81,500 and 24,900/81,200 will act as immediate support zones for the bulls, said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

"A pullback formation is likely to continue, with the market potentially moving up to 25,250/82,200 or the 200-day simple moving average (SMA). Further upside could also push the market toward 25,350/82,500. On the flip side, if the market falls below 24,900/81,200, sentiment could change. Below this level, traders may prefer to exit their long positions," he adds.

The broader trend remains weak. As long as the index stays below the 200-DMA, sentiment is likely to remain negative, and any bounce should be used to exit leveraged long positions or to create short positions, said Rupak De, Senior Technical Analyst at LKP Securities. "On the upside, immediate resistance is placed at 25,200, while on the downside, support is seen around 24,900."

14 Days RSI is moving higher with a positive divergence on the Nifty daily chart, which is an early sign of emerging strength. Nifty has managed to hold above the Budget-day low of 24,573, indicating a potential short-term trend reversal, said Nandish Shah, Deputy Vice President at HDFC Securities. "It needs to decisively surpass the positional resistance of 25,500 to confirm a bullish reversal."
 

Nifty Bank outlook

Buying demand is seen in Nifty Bank emerging from the support area of 58,100-57,800 being the confluence of the recent low and the 100 days EMA. A follow through weakness below the support area will open further downside towards 57,000 levels, said Bajaj Broking.

"On the higher side only a move above 59,000-59,200 levels will signal a pause in the current downtrend being the confluence of the recent breakdown area and 50 days EMA. Volatility is expected to remain at an elevated level in the current week on account of the volatile global cues and RBI monetary policy outcome," it said.

Nifty Bank underperformed the frontline indices on Monday but still managed to close in the green. The 50 day EMA zone at 59,000–59,100 now acts as the immediate resistance, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities. "On the downside, 58100–58000 remains the crucial support zone for the index," he said.