Benchmark Indices Likely to Brush Off Pahalgam Impact on Strong Global Cues

While the last three historical references of major terrorist attacks or military actions suggest a subdued opening for Indian equities on April 23, a day after the Pahalgam tragedy, the market has consistently defied expectations with its unpredictable reactions. The benchmark indices closed 0.2-1.8% lower after the 2016 Surgical Strike, 2019 Pulwama Attack and the 2019 Balakot Airstrike.

Bucking the trend, today’s GIFT Nifty indicates a gap-up opening, potentially marking a seventh consecutive session of gains for the benchmark indices, bolstered by strong global cues. This surprising resilience yet again shows that conventional wisdom often falls short when predicting India's dynamic financial markets.

The Indian benchmark indices could further extend its gains today taking strong global cues as the US stock markets snapped a four-day losing streak after the US Treasury Secretary said he expects a de-escalation in China-US tariffs in the near future. Donald Trump’s statement on not being in favour of removing Federal Reserve Chairman Jerome Powell also boosted the Wall Street’s sentiment.

The US indices closed 2.5%- 2.7% higher, following which the Asian indices such as Nikkei 225 and Kospi surged as soon as they opened. 

Both the benchmark indices—Nifty 50 and BSE Sensex—closed 0.2% higher on Tuesday at 24,167.25 points and 79,595.59 points.

“While strong domestic fundamentals continue to provide support, underperformance in the US markets is capping the upside momentum,” LiveMint quoted Ajit Mishra – SVP, Research, Religare Broking, as saying. Some consolidation is expected in Nifty as the index has reached its immediate target of 24,250 points, Mishra said. However, the overall tone remains positive, he added. “Traders are advised to maintain a ‘buy on dips’ approach in the index and focus on stocks showing momentum, particularly those driven by earnings announcements.”

The market appears to be optimistic but cautious in the short-term and as long as the Nifty remains above 23,850 points, the bias stays with the bulls, Dhupesh Dhameja, a derivatives research analyst at SAMCO Securities, said in a note. “A decisive close above 24,300 points could unlock the next leg of the rally, whereas sustaining above the key support zone of 23,850–23,900 points will be essential to preserve the bullish structure,” he added.

Market will watch out for the March quarter earnings results of LTIMindtree, Tata Consumer Products, Bajaj Housing Finance, 360 ONE WAM Ltd, Dalmia Bharat, among others, today.  HCL Technologies is also among the stocks expected to be in the spotlight today as the company’s earnings for the March quarter was largely in line with the Street’s estimates. Although the IT company trimmed its revenue growth guidance to 2-5% in constant currency terms for the ongoing financial year, it was still more than its peers.

Among other stocks, Bharti Airtel and its subsidiary, Bharti Hexacom, could also be in the radar of investors as they have inked pact with Adani Data Networks, a subsidiary of Adani Enterprises, to acquire rights to use 400 MHz of spectrum in the 26 GHz band across six states in India.