Indian benchmark indices are expected to open on a muted note on Tuesday following mixed global market cues from West Asia. According to Upstox, GIFT NIFTY futures suggest that the NIFTY50 index will open 23 points lower at 24,040, indicating a flat-to-negative start for the domestic market. The optimism over an imminent US-Iran peace deal was tempered by new U.S. strikes in the Middle East, creating uncertainty in global markets. However, the Dow Jones Industrial Average hit an intraday record high on Friday, its first since the US-Iran war began, as AI-driven trade and market optimism over negotiations to end the war lifted risk appetite.
Brent crude oil prices rose more than 1% in early Asian trade to $97.32 per barrel after initially steadying near $97 on Tuesday morning. As reported by Upstox, some cautiousness prevailed after Trump said that the attacks may follow soon if the deal failed. The dollar steadied on Tuesday on renewed safe-haven demand, though it remained some distance away from a six-week peak hit last week. The Asian market investor sentiment remains mixed with KOSPI gaining nearly 3% while Nikkei and Hang Seng shed up to half a per cent on Tuesday morning. US stocks remained closed on May 25 for Memorial Day, but the positive sentiment from Friday's record highs continues to influence market sentiment.
The NIFTY50 index maintained positive momentum throughout the day, successfully closing above the 20-day SMA after a long time, which supports further uptrend from current levels. According to Kotak Securities, the 20-day SMA or 23,875/76,000 would act as a key support zone, with the market potentially continuing positive momentum towards 24,200-24,250/77,000-77,200. The bullish crossover in the RSI is further supporting the positive momentum, with the trend likely to remain strong towards 24,200 and higher. 24,000 remains the nearest and the crucial support level and 24,400 as the key resistance level. The bullish bias is expected to remain healthy as long as the Nifty 50 defends the 23,900-23,800 support zone, with 24,300 as the immediate resistance to watch, followed by the 24,600 zone.
The option data changed drastically on Monday after the index managed to close above crucial resistance levels. As reported by Upstox, the 24,000 calls witnessed heavy unwinding and strong open interest addition on the put side. Similarly, the 23,800, 23,900, 23,950 levels also show strong open interest concentration, indicating strong downside protection below 24,000 levels. On the flipside, the 24,500 calls hold the highest open interest, indicating a strong resistance for today's expiry. The maximum Call open interest was seen at the 24,500 strike (with 1.11 crore contracts), followed by the 24,000 strike (98.77 lakh contracts) and 24,400 strike (94.78 lakh contracts). The maximum Put open interest was at the 24,000 strike (1.29 crore contracts), which can act as a key support level.
The NIFTY Put-Call ratio (PCR) jumped to 1.26 on May 25, the highest level since January 2, from 1.08 compared to the previous session. According to Moneycontrol, this indicates traders are selling more Put options than Call options, generally reflecting firming up of bullish sentiment in the market. The fear gauge, India VIX, declined sharply by 6.28 percent to 16.7 level, signalling increased comfort for bulls, though a decisive fall below the 15 mark is necessary for stronger confidence. A long build-up was seen in 68 stocks with increased open interest and price, while 108 stocks saw short-covering indicating decreased open interest along with price increases. Provisional data suggest that FPIs turned net sellers of domestic stocks to the tune of ₹821.75 crore on Monday, while domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of ₹3,856.88 crore on a net-net basis.
