After taking a beating in trade in the previous session, Dalal Street is likely to see a muted start at the opening bell as indicated by GIFT Nifty. Global trade uncertainties, foreign investor selling, coupled with a weak earnings season are likely to weigh on investor sentiment.
At 7:10 am, the GIFT Nifty index was quoting 24,799.5, higher by a meagre 0.1 percent or 25 points.
Overnight, Wall Street took a breather in trade, snapping the six-session winning streak seen in the S&P 500, while the tech-driven rally also fizzed out. All three key indices closed in the red, with the Dow Jones index slipping 0.27 percent, while the tech-heavy Nasdaq Composite and the broad-based S&P 500 sank 0.4 percent.
Benchmarks in Australia, South Korea and Hong Kong all climbed in trade. The KOSPI index rallied nearly one percent, while the Hang Seng index was higher by half a percent. In Japan, the Nikkei 225 and broader Topix index trimmed some morning gains to hover 0.1 percent above the flatline.
In the previous session, equity benchmarks extended their losing streak for the third consecutive session on May 20, weighed down by weak global cues and sustained FII offloading. The Nifty 50 opened on a firm note, briefly reclaiming the psychological 25,000 mark, but failed to hold on to early gains amid lackluster follow-through buying.
Further, foreign institutional investors (FIIs) extended their selling streak for the second straight session on Tuesday, offloading equities worth Rs 10,016 crore, their steepest single-day selloff in over two months (Feb 28), according to provisional NSE data. In contrast, domestic institutional investors (DIIs) provided some support to the market with net purchases of Rs 6,738 crore.
"Technically, Nifty formed a big red candle on the daily scale and breached the major support zone of 24,800–24,850, signalling weakness. The next major support for the index is placed near 24,390, where the 21-Day Exponential Moving Average (21-DEMA) is positioned," said Hrishikesh Yedve, AVP, Asit C. Mehta Investment Intermediates.
On the upside, immediate resistance is seen around 24,850. As long as the index trades below this level, traders are advised to adopt a stock-specific approach and keep on booking profits on bounce.
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