Pre Market Setup (May 21): GIFT Nifty futures gain 26 pts; markets likely to open in green amid crude spike, FII selloff

Indian markets are likely to open on a cautious but upbeat note on Wednesday, May 21, as GIFT Nifty gained 26 points or 0.10 per cent at 24,800.50. The gain follows a day of selling pressure when benchmark indices broke a two-day consolidation phase, weighed down by global jitters and weak sentiments.

Analysts opine that if the Nifty fails to convincingly move beyond the 24,700 level, there may be a more severe correction to the 24,300 level. A relief bounce past 24,700 can, however, indicate a return towards range-bound trade. On Tuesday, India VIX rose a mere 0.2 per cent to 17.38, indicating low nervousness in the market.

Global Markets

Wall Street closed lower overnight with the S&P 500 ending six-day winning streak, weighed down by higher US Treasury yields and debt sustainability fears. Asian markets registered mixed signs this morning—Topix rose 0.3 per cent in Japan and ASX 200 increased 0.6 per cent in Australia, while other indices such as Hang Seng and Nikkei 225 futures were flat.
Oil surges more than 1% on Israel-Iran strike risk
Crude oil prices have jumped more than 1 per cent following indications from US intelligence that Israel could be planning an attack on Iranian nuclear facilities. This has revived concerns about geopolitical tensions in the Middle East that can disrupt oil supply.

Gold gains as dollar retreats

Gold prices gained on Wednesday as the US dollar fell to a two-week low. The safe-haven demand of gold increased further due to fiscal uncertainty in the US, with Congress debating on tax bills.

F&O ban list

Two stocks—RBL Bank and Manappuram Finance—are under the F&O ban today after crossing 95 per cent of the market-wide position limit.

FII-DII flow

Foreign investors continued their selling spree on Tuesday, offloading shares worth Rs 10,016 crore. In contrast, domestic institutional investors (DIIs) provided support with net purchases worth Rs 6,738 crore.

Rupee under pressure

The rupee slid by 16 paise to Rs 85.58 against the US currency on weak equities and a rally in US yields. Sentiment also suffered as FIIs raised their net short positions in index futures from Rs 23,498 crore to Rs 38,748 crore, reflecting bearish sentiments.

What to watch today

• Nifty’s chances of recapturing 24,700

• Geopolitical newsflow surrounding Israel-Iran tensions

• Trends in crude oil and gold prices

• US debt ceiling news

• Institutional flow and F&O activity