GIFT Nifty hints at a muted start; FIIs return as net buyers

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Dalal Street is poised for a muted opening on Wednesday, with GIFT Nifty trading 18 points higher at 24,237, reflecting a 0.07 per cent gain. This comes after Indian markets shed early gains on Tuesday due to profit booking, following a two-day rally amid weak global cues.

Despite cautious sentiments, foreign institutional investors (FIIs) turned net buyers, injecting Rs 9,947 crore into the markets on Monday. Analysts, however, caution that a sustained trend reversal among FIIs is yet to be confirmed.

Market sentiment and technical outlook

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services says, "President-elect Trump has already started declaring what he intends to do immediately upon his taking office on January 20th. 25% tariffs on Mexican and Canadian imports and an additional 10% tariffs on Chinese imports have already been announced. How these countries react to these tariffs remains to be seen. Trump has declared only 10% additional tariffs on Chinese imports indicating that he will be careful not to trigger imported inflation in the US. Market participants will be closely watching this trade space which has become unpredictable. India is unlikely to be impacted in the initial phase of Trump’s tariff plan but may come under Trump’s radar soon since India has a trade surplus with the US. The market will likely consolidate around the current levels since there are no immediate triggers for a breakout or a break down. A major market concern from relentless FII selling is receding since they have marginally turned buyers."

Global cues

Wall Street ended higher overnight, buoyed by a tech stock rebound and investor optimism over fiscal policies. The Dow, S&P 500, and Nasdaq gained 0.28 per cent, 0.57 per cent, and 0.63 per cent, respectively. However, Asian markets showed mixed sentiments, with Japan's Topix falling 0.5 percent, while Australia's S&P/ASX 200 rose 0.6 percent.

Other market highlights

  • India VIX: The volatility index rose marginally to 15.30, reflecting cautious investor sentiment.
  • Rupee: The rupee closed flat at 84.29 against the dollar on Tuesday, buoyed by FII inflows despite a stronger greenback.
  • FII/DII activity: FIIs turned net buyers at Rs 1,157 crore on Tuesday, while domestic institutional investors (DIIs) sold shares worth Rs 1,910 crore.

As markets navigate profit booking and mixed global trends, the focus remains on FII activity and sectoral opportunities. Investors are advised to adopt a stock-specific strategy while keeping an eye on key support and resistance levels for the Nifty.