The Indian equity indices are expected to open on a higher note as tension in West Asia escalated after Israel and Iran attacked each other’s major cities. Experts believe that it is highly unlikely that markets will breach this level.
“We are not confident that the bounce off the lower Bollinger band last Friday has the strength to continue. Favoured view expects the upsides to be limited to 24,832, and settle in the 24,500 vicinity. If the consolidation and renewed upside attempts thereof do not succeed in clearing 24,832, expect a drop to 24,060,” said Anand James, Chief Market Strategist at Geojit Investments.
Technically, on weekly charts, the markets on Friday formed a long bearish candle and are currently trading comfortably below the 20-day SMA (Simple Moving Average), which is largely negative.
“We believe that as long as the market (Nifty 50) remains below the 20-day SMA or 24,850, weak sentiment is likely to continue. On the downside, the market could retest the level of 24,500,” said Amol Athawale, Vice President of Technical Research at Kotak Securities.
A breach of 24,500 could accelerate selling pressure. Below this level, the index could slip to the 50-day SMA around 24,300, added Athawale.
What’s the Israel-Iran conflict and the big worry for India?
Israel launched “preemptive” strikes on Iran late Thursday night, targeting Iran’s nuclear facility and military camps. In response to that, Iran conducted a ballistic missile attack on Israel. An overnight assault of missiles from Iran led to a partial closure of an oil refinery in Haifa, Israel, as both nations exchanged strikes on each other’s energy facilities throughout the weekend. The attacks mark an escalation that brings the conflict closer to an industry vital to the global economy and markets.
“We expect market focus to remain on oil exploration companies on the back of a rise in crude prices amidst the backdrop of escalation in Israel-Iran military action. Further, any such escalation would have a positive rub-off effect on domestic defence companies on the expectation of increased export orders amidst higher defence spending,” said Siddhartha Khemka, Head of Research and Wealth Management at Motilal Oswal Financial Services, after market hours on Friday.
“Overall, we expect the market to remain subdued on the back of weak global cues, while industry-specific news flows would continue to drive sectoral movements,” added Khemka.