The GIFT Nifty index, a futures contract based on the Nifty 50 index, retreated from the previous session's high but still indicates a sharp rise for the benchmark when it opens later in the morning.
The index jumped over 4% or 870 points after US President Donald Trump announced a five day pause on all military strikes against Iranian power plants and infrastructure Monday evening. Taking to his social media account, Trump said US negotiators and Iran have had "productive conversations" for the resolution of hostilities in the Middle East in the last two days.
The GIFT Nifty was down 350 points or 1.6% at near 22,900 as of 7:00 a.m. Tuesday. The Nifty settled at 22,512.65 on Monday, down 2.6%. The difference suggests a nearly 400 points gap up open for the blue-chip gauge.
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Wall Street Cues
A possible de-escalation in the Middle East conflict rippled through markets, with oil falling and stocks rising as Trump said he'd postpone strikes on Iranian energy infrastructure after what he described as productive talks toward ending hostilities.
Global benchmark Brent crude dropped over 14% before trimming losses as Iran denied the discussions, but it closed below $100. The S&P 500 added about 1%, Nasdaq 100 rose 1.2% and the Dow Jones Industrial Average jumped 1.4%.
Nifty Support
"Emotions driven news will drive the market whenever such geopolitical factors," said Kranthi Bathini, director - equity strategy at WealthMills Securities Pvt. "There are no support and resistance... by and large irrelevant in such a market,"
However, before the Trump announcement, analysts expected Nifty to see upside resistance at 22,850 and 22,900.
"Near-term floor now eyes 22,400, beyond which a breakdown could drag the index toward its 52-week low of 21,743," said Vinay Rajani, senior technical research analyst at HDFC Securities. Technically, the index continues to show a bearish bias in both the short and medium term, as it is forming a pattern of lower highs and lower lows, according to Bajaj Broking.
On daily charts, the Nifty has formed a long bearish candle, and on intraday charts, it is holding a lower top formation, which indicates further weakness from the current levels, pointed Shrikant Chouhan, head of equity research at Kotak Securities.
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