Tensions are palpable in the financial markets as India initiates “Operation Sindoor”, targeting nine terrorist camps within Pakistan. This decisive military response comes on the heels of the tragic Pahalgam attack on April 22, which resulted in the loss of 26 lives. Following the airstrikes, artillery exchanges have erupted along the Line of Control (LoC), further escalating the situation.
Market Reactions to Military Actions
The Ministry of Defence has clarified that the airstrikes did not target any military installations in Pakistan. However, this increase in geopolitical uncertainty has left investors on edge. A pressing question remains: will the Nifty maintain its position above 24,000 today? Market experts suggest a temporary pause for the Nifty, though a complete reversal is deemed improbable.
On May 6, the Nifty closed at 24,379.60, reflecting a decline of 0.33% and forming a bearish engulfing pattern. Despite this dip, the broader upward trend appears intact, as the index remains above crucial moving averages.
Key Support and Resistance Levels
Analysts caution that if the Nifty drops below 24,240, this support level could transform into a resistance area, complicating any potential recovery. Key levels to monitor include:
- Support: 24,200
- Resistance: 24,530
Chief Market Strategist at Geojit Investments, noted, "We adjusted our upside target due to signs of distribution and waning momentum. Only 23.8% of Nifty 500 stocks are above their 10-day SMAs, indicating a possible trend shift in the broader market. If a significant decline occurs, we anticipate consolidation around 23,930 – 24,050. Conversely, if dips do not exceed 24,280, a swift recovery could be on the horizon."
Expert Opinions on Market Trends
Mehra, a Technical Research Analyst at SAMCO Securities, commented, "The overall trend remains optimistic. The current dip seems to be a typical pullback that may continue into the next trading session." The Relative Strength Index (RSI) is currently hovering around 65, indicating a neutral stance without any alarming signals.
Volatility and Global Market Impact
The India VIX, a measure of market volatility, surged by 3.6%, closing at 19. Should it breach 21, the market may experience heightened volatility, potentially leading the Nifty into deeper correction territory.
In the background, Asian markets are displaying mixed trends. Japan’s Nikkei 225 opened positively but later fell 0.2% to 36,757. In contrast, South Korea’s Kospi saw a rise of 0.43% to 2,570, while Taiwan’s Weighted Index increased by 0.34%, reaching around 20,592.
As the situation unfolds, investors are urged to stay vigilant, keeping a close eye on both domestic and global developments that could impact market dynamics.
