Opening bell: Sensex, Nifty set for positive start on Israel-Iran truce; key levels to watch

Tracking positive cues from the global equity markets, the Indian stock market is expected to open higher on Wednesday as investor sentiment improved after the Israel-Iran ceasefire came into effect. The firm trends in GIFT Nifty Futures and a fall in crude oil prices are set to boost sentiment. At 8:00 a.m., the GIFT Nifty Futures stood at 25,181, up 103 points, or 0.41%, indicating a gap-up opening for the benchmark indices—the BSE Sensex and the NSE Nifty.

On Tuesday, the domestic bourses ended marginally higher on a highly volatile day as the benchmark indices witnessed sharp swings in both directions before settling in the green. The benchmark indices—the BSE Sensex and the NSE Nifty—dropped nearly 1% from day’s high level as investors turned jittery following reports of a possible ceasefire violation by Iran, just hours after it was agreed upon.

The BSE Sensex closed 158.32 points, or 0.19%, higher at 82,055.11, and the NSE Nifty50 ended at 25,044.35, up by 72.45 points, or 0.29%. The 30-share Sensex dropped 963 points from its intra-day high, while the 50-share Nifty fell 273.7 points from day’s high level.

U.S. stocks extend rally as Middle East tensions ease

Continuing its gaining streak for the second straight session, U.S. stocks rose over 1% on Tuesday as investors reacted positively to a tentative ceasefire between Israel and Iran and closely analysed U.S. Federal Reserve Chair Jerome Powell’s congressional testimony for hints on future monetary policy. All three major indexes posted solid gains for the second straight session amid hopes that the fragile ceasefire between Israel and Iran will hold. The Dow Jones Industrial Average rallied 1.19%, while the S&P 500 surged 1.11%, and the Nasdaq Composite advanced 1.43%.

Asian stocks advance on Israel-Iran ceasefire hopes

The equity markets in the Asia-Pacific region extended their gaining streak for the second consecutive session today amid hopes that the Israel-Iran ceasefire would hold. The market sentiment was further boosted by continued fall in oil prices after U.S. President Donald Trump's announcement of the ceasefire. Both oil contracts—Brent Crude and West Texas Intermediate (WTI) crude—have declined over 10% in two days, falling below $70 per barrel.

Among regional players, Hong Kong was the top performer, with the Hang Seng rising nearly 1%. The Nikkei 225 index in Japan was up 0.15% and South Korea’s Kospi added 0.3%, while China’s Shanghai Composite opened a tad higher. The Taiwan Weighted index rose over 0.7%, Singapore’s Straits Times added 0.6%, while Australia’s ASX 200 was trading flat in the final hour of trade.

Key levels to watch

Technically, the Nifty index is seen maintaining a positive bias and will retest the upper band of the consolidation range of the last six weeks'— 25,200–25,250—in the coming session, Bajaj Broking Research said in a note.

“Immediate bias remains positive above 24,700-24,800 levels being the confluence of the 20 days' EMA and last week's low. On the higher side a decisive breakout above the upper band of the last six weeks' consolidation range will pave the way for a further leg higher towards the 25,500 in the near term,” the brokerage said.

For Bank Nifty, the index is expected to maintain a positive bias and head towards the all-time high placed around 57,050 and 57,600 levels in the coming weeks. The immediate bias remains positive above 55,400 levels, this being the confluence of recent consolidation and last week's low. The key support is placed at 54,500-54,000 levels, being the confluence of 50 days' EMA and the key retracement level of the previous upmove.

Shrikant Chouhan, Head-Equity Research, Kotak Securities, said that 25,000 and 82,000 would act as a key support zone for the Nifty and Sensex, respectively. “Above this level, we could expect a technical bounce back up to 25,200–25,300 and 82,500-83,000. On the flip side, if the market falls below 25,000/82,000, it could extend the correction up to 24,850–24,800/81,600-81,500. The current market texture is volatile and non-directional; hence, level-based trading would be the ideal strategy for day traders.”