Dalal Street recorded start in the green to the session on Monday, August 11, even as investor sentiment turned volatile following concerns regarding U.S. President Trump's tariffs, along with a tepid earnings season.
At 09:26 a.m., the Sensex was up 170.61 points or 0.21 percent at 80,028.40, and the Nifty was up 57.70 points or 0.24 percent at 24,421.00. About 1,788 shares advanced, 1,176 shares declined, and 156 shares were unchanged.
India VIX, the measure of fear and nervousness in the markets, soared five percent to 12.62. The broader end of the markets also remained muted, with the Nifty Midcap 100 and Nifty Smallcap 100 hovering close to the flatline.
On the sectoral front, the indices were largely flat with a positive bias. Nifty PSU Bank led early gains, rising 0.8 percent, followed by Nifty Metal and Infra, up 0.4 percent and 0.2 percent, respectively. Auto, Energy, Pharma, FMCG, and IT inched up marginally, while Realty and Media edged lower by 0.1 percent and 0.2 percent.
"India has been underperforming other markets significantly in the last six weeks. Nifty is down 7.6% from the September 2024 record high. Even though a sharp short-covering rally may happen on positive news, sustained rally will happen only fundamental support on the earnings front. This can happen from Q3 onwards. Now, safety is in fairly-valued largecaps," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Global markets
Major share indexes crept higher in Asia on Monday as upbeat company earnings underpinned high valuations in the tech sector, while a crucial report on U.S. inflation would likely set the course of the dollar and bonds.
On Friday, U.S. stocks ended higher, and the Nasdaq notched a record closing high for the second straight day on Friday as technology-related shares, including Apple, gained, and as investors were optimistic about potential interest rate cuts.
The Dow Jones Industrial Average rose 0.47 percent, the S&P 500 gained 0.78 percent, and the Nasdaq Composite gained 0.98 percent.
Institutional flows
On August 8, after three weeks of consecutive selling, Foreign Portfolio Investors (FPIs) turned net buyers of Rs 1,932 crore-worth of shares, as its highest single-session buy since June 26. Their shift to net buying signals a potential reversal or at least a pause in their risk aversion toward India.
At the same time, domestic institutional investors (DIIs) net bought Rs 7,723 crore of shares, according to provisional NSE data.
Technical levels
"Nifty is likely to encounter an immediate resistance around 24,500-24,600 levels, followed by 24800 levels, at which we’ve seen call writing in the weekly expiry. Traders are advised to remain cautious till Nifty closes above the 24,800 levels," said Devarsh Vakil, Head of Prime Research, HDFC Securities.
He added, on the downside, considering an oversold level of FIIs’ long to short ratio, a near-oversold level of Nifty open interest put call ratio and Put writing at 24,200-24,300 levels, suggests immediate support in this range, followed by 24,000 levels.
Derivatives outlook
The derivatives landscape mirrors the technical weakness, with aggressive call writing overpowering put positions. The 24,500 strike has seen heavy call writing, with open interest swelling to 1.17 crore contracts, making it a formidable resistance. On the downside, the 24,000 strike holds the highest put open interest at 58.11 lakh contracts, acting as immediate support, noted Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.
Notably, put writers have unwound positions and migrated to lower strikes, while call writers have added significant exposure near at-the-money levels, signalling persistent caution. The Put-Call Ratio (PCR) has plunged from 1.02 to 0.48, reflecting an aggressive bearish stance. However, given the oversold reading, a minor technical pullback cannot be ruled out in the short term.
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