Heavyweights pull Sensex, Nifty out of 3-day weakness, but analysts see uncertainty ahead

Near-term volatility is likely as investors grapple with tensions in Middle-East

Domestic frontline indices Sensex and Nifty snapped three-day weakness to edge up on April 18 morning, supported by gains in heavyweight stocks such as TCS, Reliance Industries, Bajaj Twins, Asian Paints, and HDFC Bank. However, analysts expect bearish bias to persist in the near-term due to a combination of geopolitical uncertainty, US Federal Reserve's hawkishness, and stubborn inflation.

Around morning,  the Sensex was up 278.95 points or 0.38 percent at 73,222.63, and the Nifty was up 101.60 points or 0.46 percent at 22,249.50. The market breadth was in favour of gainers as around 2,077 shares advanced, 445 shares declined, and 95 shares unchanged.

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Moving ahead, the Nifty may continue to display weak bias in the near term and head towards 21,947, while 22,503 could be a strong resistance, said Deepak Jasani, Head of Retail Research, HDFC Securities.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, too, expects some near-term volatility as investors grapple with tensions in Middle-East. "The Iran-Israel tension in West Asia continues to weigh on stock markets globally. Until this uncertainty is out of the way, markets are unlikely to take a strong directional up move," he said.

Meanwhile, broader markets outperformed benchmarks within the first hour of trade. The BSE Midcap and BSE Smallcap indices gained up to 0.8 percent on April 18. India VIX, which measures near-term volatility cooled off by 3 percent to 12.17.

Sectorally, Nifty IT and Nifty Healthcare indices were the worst performers as they slipped up to 0.3 percent on April 18 morning. Conversely, Nifty Energy and Nifty PSU Bank indices were top performers as they surged over a percent.

Among individual stocks, shares of Bajaj Auto, HDFC Life Insurance, and Infosys gained up to 2 percent on April 18 as they prepare to unveil fourth quarter financials.

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Global markets mixed; US bond yields cool off marginally

Globally, US markets ended in red overnight, with the S&P 500 and tech-heavy NASDAQ Composite indices extending losses to fourth consecutive session.

Asia-Pacific markets, however, climbed this morning as rising treasury yields took some breather. The US 10-year treasury yield fell as much as 8 basis points (bps) to 4.5 percent, while 2-year treasury note retreated by nearly 4 bps to trade below 5 percent-mark.

Japan's Nikkei 225 reversed earlier losses to gain 0.25 percent, while Australia's S&P 200 climbed 0.5 percent, and South Korea's Kospi advanced over a percent this morning.

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