HSL Prime Research

Opening Bell - Daily Morning Commentary

Market to Focus on Derivative Rollovers.

Stock markets closed mixed on Wednesday, with the S&P 500 and Nasdaq modestly higher while the Dow Jones fell. U.S. equity markets also closed lower on Tuesday as consumer confidence declined more than expected.

Artificial intelligence chipmaker Nvidia reported better-than-expected quarterly revenue and adjusted earnings per share. Following the announcement, Nvidia's shares rose 3.7% in extended trading.

In economic data, the S&P CoreLogic Case-Shiller 20-City Home Price Index increased by 4.5% in December compared to the same period last year, surpassing estimates of 4.4%. The Conference Board's Consumer Confidence Index fell for the third consecutive month to 98.3 in February, below forecasts of 103.

A draft U.S.-Ukraine agreement on critical minerals and strong corporate earnings helped European shares close at a record high.

Oil prices hit a two-month low due to a surprise increase in U.S. stockpiles, and the growing prospects for a Ukraine-Russia peace deal affected prices.

Asian Pacific stocks displayed mixed reactions following U.S. President Donald Trump's new tariff announcements on the European Union.

The Indian rupee closed sharply lower against the U.S. dollar on Tuesday after experiencing its worst intraday fall in over three weeks, as banks consistently bought dollars.

Market attention will centre on rollover activity today, marking the final day of monthly derivative contracts. As traders adjust positions and transfer contracts to subsequent months, these rollover dynamics will likely drive market movements. FII’s expiration-day flows should provide valuable insights into institutional positioning and market sentiment moving forward.

The Nifty index extended its losing streak to a sixth consecutive session on Tuesday, registering a slight decline to close at 22,547. Critical support is projected at 22450, based on a 76.4% retracement of the uptrend from 21281 (the low in June 2024) to 26277 (the all-time high reached in September 2024). On the upside, the 22700-22800 band is expected to be a significant resistance level.

Opening Bell - Daily Morning Commentary

Trump's Tariff Plans Weigh on Global Sentiment

US equity markets closed lower on Monday, with technology and consumer discretionary stocks leading the decline, reflecting a risk-off sentiment. President Trump confirmed that tariffs on Canada and Mexico will take effect next week after the 30-day pause implemented in early February expires.

The Nasdaq Composite fell more than 1%, with significant technology stocks creating the biggest drag as investors expressed concerns about demand for AI-supporting technology while awaiting results from market heavyweight Nvidia. The S&P 500 edged slightly lower, marking its third consecutive day of declines, while the Dow Jones managed to secure a marginal gain. The defensive healthcare sector led percentage gains, rising 0.75%, while technology was the biggest laggard, dropping 1.43%.

Asian stocks opened lower on Tuesday following US President Donald Trump's decision to restrict Chinese investments and implement tariffs on Canada and Mexico. This prompted investors to reduce their positions. The late-session decline in US markets further dampened sentiment.

The Indian rupee remained unchanged at 86.71 against the US dollar. Indian markets will be closed on Wednesday, February 26, in observance of Mahashivratri.

The Nifty extended its losing streak to a fifth consecutive session yesterday, yielding to weak global cues and dropping 242 points (1.06%) to close at 22,553—its lowest level since June 5, 2024. Immediate support for the Nifty is now anticipated at 22450, which coincides with the 76.4% Fibonacci retracement of the swing from 21,281 to 26,277. The previous support level of 22,800 is expected to reverse its role and serve as resistance.

Opening Bell - Morning Commentary

Cautious Mood on D-street – Markets to open lower on weak global cues

Major U.S. indices retreated during the holiday-shortened week, with sharp losses in the latter half erasing early gains. Walmart's conservative guidance for the upcoming year triggered broader concerns about consumer spending and economic health. Market sentiment further deteriorated amid uncertainty surrounding tariffs and interest rate cuts. Markets were rattled by Trump's announcement of planned additional tariffs on automobiles, pharmaceuticals, and lumber products.

The Dow Jones Industrial Average and Nasdaq Composite both declined 2.5%, while the S&P 500 fell 1.7% for the week. Geopolitical developments dominated headlines, particularly President Donald Trump's diplomatic efforts to end the Russia-Ukraine conflict.

Asia market opened lower today after Wall Street logged its worst session of the year last Friday on lacklustre U.S. economic data that pointed to a slowing economy and sticky inflation.

Zomato and Jio Financial Services will replace Britannia Industries and Bharat Petroleum Corporation in the Nifty 50, effective March 28.

Indian markets are likely to open weak following soft global cues, particularly the sharp decline in U.S. markets on Friday. This potential weakness could push indices below crucial support levels of 22700. Any breach of near-term technical supports might trigger additional selling pressure, potentially driving the Nifty towards the 22450 level. The broader market indices - midcap and small cap are positioned near crucial long-term supports. Market sentiment is cautious amid heightened uncertainty surrounding trade relations and geopolitical tensions.

Opening Bell - Daily Morning Commentary

Walmart's forecast dampened investor risk appetite

U.S. stocks sold off on Thursday as ongoing tariff jitters and a downbeat Walmart forecast dampened investor risk appetite.

Dow Jones posted its most significant one-day loss since Jan. 10 — down 450 points, or 1% — while the S&P 500 SPX shed 0.4% after scoring back-to-back record finishes. The Dow had dropped 677 points at its session lows.

Walmart, the world's largest retailer, provided current fiscal year sales and profit forecasts that fell short of analysts' expectations, suggesting dampening consumer demand.

The Conference Board's Leading Economic Index posted a 0.3% decline in January, all but erasing the gains of the prior two months—the first gains since February 2022.

Asian markets are recovering after opening lower on weak US cues. The Bank of Korea will cut its key interest rate by 25 basis points on Tuesday, offering support to an economy that barely grew last quarter. After unexpectedly holding its policy rate steady last month, South Korea's central bank signaled it needed to wait for domestic political turmoil, which weighed on the currency, to stabilize before easing further.

The yen and gold have been primary safe-haven beneficiaries of the emerging Trump agenda. The dollar/yen fell below 150 to its lowest since early December, while gold got within $50 of $3,000 per ounce.

Back home, Nifty fell for the third consecutive session yesterday, weighed down by underperformance in financial heavyweights. Nifty ended the session with a loss of 19 points to close at 22913. The support of 22800 was protected as Nifty made an intraday low at 22812 and recovered from there.

The Indian rupee strengthened by 29 paise, breaking out of a five-day consolidation range. This appreciation was fuelled by dollar selling from foreign banks and the continued unwinding of long positions.

Nifty Midcap and small-cap indices bucked the trend. Considering the strength in the broader markets, it seems that Nifty is headed higher for the next target of 23235. Trading longs should be protected with 22725 Stoploss in Nifty.

Indian markets are likely to open subdued on weak global cues.

Opening Bell - Daily Morning Commentary

Federal Reserve meeting minutes signal a pause in interest rate cut

U.S. stocks ended modestly higher on Wednesday, and the S&P 500 notched its second straight all-time closing high as investors scrutinized the minutes from the Federal Reserve's January policy meeting and digested U.S. President Donald Trump's tariff plans. All three major U.S. equity indexes made gains on the day.

At the Fed's January policy meeting, the U.S. central bank left its key interest rate unchanged. The minutes show policymakers expressed concern about stubborn inflation and the potential effect of Trump's policy proposals, particularly tariffs, on their efforts to bring price growth down to their target.

US President Donald Trump's tariff threats continued to weigh on risk appetite. Trump announced he would impose tariffs "in the neighborhood of 25%" on autos, semiconductors, and pharmaceuticals, the latest in a series of measures that have raised concerns over the consequences of a global trade war.

China kept its loan prime rates steady, focusing on financial stability. Stocks in Japan and Australia dropped, while equity index futures for Hong Kong also drifted lower after the minutes of the Fed meeting.

The Nifty declined for the second consecutive session, concluding the day with a loss of 12 points to settle at 22,932. Although the index demonstrated weakness, the broader market exhibited resilience. The critical support level of 22,800 was successfully protected once again. Should the index surpass 23050, that will pave the way for an extended recovery toward the subsequent resistance of 23235.

Markets are expected to start trading on a subdued note today amid escalating concerns regarding trade tensions and the anticipated postponement of the Federal Reserve's interest rate reductions.

Opening Bell - Daily Morning Commentary

Asian shares slipped on the threat of a broader global trade war.

All three major US stock indexes swung between losses and gains before turning positive in the final minutes of trading.

The S&P 500 edged to a new record close in a shortened holiday week. The market faces several key factors: the end of earnings season, upcoming Federal Reserve minutes, and ongoing global trade tensions. US Quarterly earnings season is nearly complete, with 74% of the 383 S&P 500 companies reporting fourth-quarter results beating expectations.

The Federal Reserve will release minutes from its January meeting today. At that meeting, officials kept interest rates unchanged amid inflation concerns and uncertainty over Trump's proposed tariffs.

Fed officials have maintained a consistent message. Philadelphia Fed's Harker and Governors Bowman and Waller cited economic strength and high inflation as reasons to maintain current rates. San Francisco Fed's Daly emphasized the need for more apparent progress toward the 2% inflation target before considering rate cuts.

Most Asian equities slipped in early trade as the threat of a broader global trade war and geopolitical uncertainty outweighed a rally in chipmakers.

Nifty ended the session with a minor loss of 14 points to close at 22945, honouring the crucial 22800 support. The Nifty small-cap Index resumed its downward journey, plunged by 1.59% to close at its lowest level since 26 March 2024.

A potential reversal signal would be a move above the 5-day EMA, currently placed around 23,020. Sustained trading above this level could trigger a pullback towards 23,235. Conversely, a break below 22,725 could reignite the downtrend.

HSL Prime Research

Opening Bell - Daily Morning Commentary

The short-term bottom seems in place - 22800 is a key support.

US stock markets were closed for trading on Monday for the President's Day Holiday. At least six Fed officials are due to speak this week, and markets will pay attention to their views on future rate cuts.

European shares marked record highs on the prospect of a Ukraine peace deal. The Australian dollar stood near a two-month high ahead of a central bank rate decision. The Reserve Bank of Australia is expected to cut its cash rate by a quarter-point to 4.10%, its first reduction in over four years.

Meanwhile, the rebound in Chinese markets continues, with tech shares listed in Hong Kong hitting a three-year high on Monday as President Xi Jinping sat down with top tech leaders in Beijing. The Hang Seng tech index is up more than 30% in a month.

Financial markets are adjusting to the increasing likelihood of the Bank of Japan (BOJ) raising interest rates sooner and to higher levels than anticipated. Hawkish signals from the central bank, coupled with persistent inflation, have led to a significant surge in Japanese bond yields.

The Nifty snapped its eight-session losing streak, posting a modest gain of 30 points, or 0.13%, to close at 22,959.. After hitting early morning lows, the index staged an impressive recovery of nearly 250 points, demonstrating resilience. The anticipated support band of 22750-22800 worked out well. From a short-term perspective, a bottom appears to be in place. Further bearish bets should be avoided as long as the Nifty holds above the 22,800 level on a closing basis. On the upside, the 23,235 level will likely act as a key resistance in the near term.

Opening Bell - Morning Commentary

Nifty's 22800 Level - A Make-or-Break Point for Bulls

US stock markets will remain closed on Monday for President's Day 2025, marking the birth anniversary of the first US President, George Washington. Asia share markets are also becalmed by a Wall Street holiday on Monday.

The Dow Jones stayed close to its all-time high, just one percent below its peak. The dollar nursed losses suffered after a weak U.S. retail sales report rekindled wagers for two rate cuts this year.

Easing inflation has opened the door for the Reserve Bank of Australia to begin an anticipated brief series of interest rate cuts, starting with a quarter-point reduction to 4.10% on Tuesday. In Japanese data, both GDP and CPI are expected to surprise on the upside.

The minutes of the Fed's last meeting are due on Wednesday and should offer some detail about the outlook for further easing. At least six Fed officials are due to speak this week.

The Indian equity markets continue to exhibit weakness, trading below critical short-term moving averages amid mounting pressure. Last week witnessed significant selling pressure in the mid-cap and small-cap segments, with several stocks experiencing sharp corrections. The global markets are scaling to new all-time highs, which could support Indian markets in limiting the downside from here.

While Indian market breadth remains subdued, technical indicators are fast approaching an oversold territory, suggesting a potential reversal. The percentage of stocks trading above their 200-day moving average in the NSE500 universe has fallen to 14%. Historically, significant downtrends have formed bottoms near such levels.

The benchmark Nifty index has shown resilience around the crucial 22,800 mark, managing to stage minor rebounds from this support level on multiple occasions. If the index defends the 22,800 level, it could trigger short covering, potentially leading to a technical bounce. A decisive move below the 22750-22800 zone could trigger further selling, potentially pushing the index toward its next support level at 22460.