US stocks slump, GIFT Nifty down nearly 100 points. How will stock market react on Tuesday?

Indian equity markets are likely to open lower on Tuesday after global cues turned weak overnight, with US stocks falling sharply and GIFT Nifty indicating a negative start. GIFT Nifty was trading nearly 100 points lower late Monday, signalling that benchmark indices Sensex and Nifty may begin the session under pressure.

The cautious sentiment follows a sharp decline on Wall Street, where the main US indices dropped more than 1% on Monday as geopolitical tensions in the Middle East intensified and oil prices surged.

Investors turned risk-averse after crude prices briefly surged close to $120 a barrel amid fears of supply disruptions. The rise in energy prices has revived concerns about inflation and the risk of stagflation in major economies.

Geopolitical tensions escalated further after Iran named Mojtaba Khamenei, son of the late Ali Khamenei, as the country’s new supreme leader, signalling a consolidation of power among hardliners in Tehran. The conflict in the Middle East has now entered its tenth day.

Oil prices later eased slightly after discussions began among governments including members of the Group of Seven and Saudi Arabia on ways to increase supply and prevent further spikes in energy prices.

However, analysts warn that crude markets may remain volatile as geopolitical developments continue to drive prices.

Maulik Patel, Head of Research at Equirus Securities, said oil markets are currently trading on geopolitical risk premiums rather than demand fundamentals.

"We believe crude oil markets have entered a geopolitical risk-premium phase, with prices increasingly driven by supply security concerns rather than underlying demand fundamentals. The ongoing US-Israel-Iran conflict and disruption around the Strait of Hormuz has materially tightened the near-term supply outlook and pushed crude above $100 per barrel for the first time since 2022," Patel said.

"If the war lasts longer and volumes through the Strait of Hormuz are restricted, oil prices could rise significantly from current levels, with demand destruction becoming the only factor that can ease prices," he added.

Technical outlook for Tuesday

From a derivatives perspective, the Nifty appears to be trading within a defined range as investors remain cautious amid global uncertainty. Hitesh Tailor, Research Analyst at Choice Equity Broking, said options data currently points to a range-bound market.

"In the derivatives market, significant put writing at the 23,800 strike and aggressive call writing at the 24,400 strike indicate that the market currently has a well-defined trading range," he said. "Traders should remain cautious near key support levels and avoid initiating fresh directional trades until a decisive breakout above the resistance zone confirms a clearer trend."

Analysts also expect volatility to remain high in the near term given the uncertain geopolitical backdrop.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the broader market structure remains weak but technically oversold. "We are of the view that the current market texture is weak but oversold. For day traders, 24,000-23,900 would act as key support zones," he said.

“If the market holds above these levels, we could see a pullback towards 24,150-24,300. On the flip side, if Nifty slips below 23,900, selling pressure could accelerate and the index may retest 23,700.”

Chouhan added that a deeper correction cannot be ruled out if global cues deteriorate further, with Nifty potentially drifting toward the 23,500 zone in the near term.

For now, traders are likely to remain cautious as global developments, especially crude oil prices and geopolitical tensions, continue to dictate the near-term direction for equity markets.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)