Recently, the weighing tensions between Israel and Iran had already been causing sentiment escalations in the US. The same drift may be seen now in the Indian Stock Market this week. Also, tensions in the Middle East may further dampen the mood.
Even though there was a holiday last week, we did observe a negative divergence in the Nifty and Sensex on Friday. This meant that the markets weren’t strong enough to go higher, even though they had hit new highs.
Analysts say that as tensions between Israel and Iran rise in the Middle East, Indian stock markets may experience a small drip as the risk-on mood may weaken. But the market as a whole is looking good for the medium and long term, and India’s growth story is still going strong, which may stop the falls.
The market for debt, stocks, and gold will be might be affected and even worsen due to the conflict in the Middle East. Earlier, things were going on normally but there might be some turbulence in the coming days.
What do experts say?
“Prices and a steady supply of oil and gas will be our worries.” Nilesh Shah, MD of Kotak Mahindra AMC said, adding further that “Markets will change as things change.” Needless to say, inflation, the current account gap, GDP growth, corporate earnings, and the Rupee are all hurt by higher oil prices.
Profit-taking in the US markets was already making people feel bad, and Ajit Mishra, SVP – of Technical Research, at Religare Broking Ltd. says that rising tensions in the Middle East may make people feel even worse.
Market instability is normal in the short term, but it means that central banks are becoming more flexible in the long term. “This presents a significant opportunity for domestic hotel players, as increased focus on domestic travel and the domestic market is anticipated due to the indefinite deferral of the Mauritius treaty change,” Ajay Srivastava of Dimensions said.
Chandan Taparia, VP and Technical Analyst at Motilal Oswal Financial Services, thinks that buyers should use price drops as a chance to buy because the market is generally going up and SIP flows are helping to buy any real price drops.
“We believe this volatility or profit booking could add value to investors to bargain hunting their value stocks to built the basket for next leg of rally once it gets stability with softness in cross broader issues globally,” he said.
Read more about what stocks to watch out for amidst the scenario here.
Bank Nifty Levels to Watch amidst Israel and Iran conflicts
Nifty went up by more than 1,000 points during the most recent move. In the last 15 trade days, it went up from 2,1710 zones to 22,775 zones. Amit Taparia of Motilal Oswal said, “Technically, key support is placed near 22,222, which is 50% retracement and previous key zones for the index.”
What if the index doesn’t stay above 22,222? More people selling their profits could push the index down to the 21,700 zone. If prices go up, the next obstacle is at 22,777. If prices stay above this level, the rise could reach new highs, Taparia said.
“Nifty can fall even more to the 22,150–22,350 range on the index front.” If there is a recovery, the level of 22,700 to 22,800 would still be a big problem, he said. “Traders should stick to a stock-specific approach and choose a hedged approach,” Ajit Mishra of Religare Broking added.
After hitting a high of 49,000, Bank Nifty has gone through some dips. Jatin Gedia, a technical research analyst at Sharekhan by BNP Paribas, says that the important support level for the banking sector is at 48,300 and below that at 47,820. The next big obstacle is at 49,000.
Read your pre-market analysis for the week here.