Ahead of Market: 10 things that will decide stock market action on Monday

Indian benchmark indices faced a decline on Friday, marking a week filled with losses. This downturn appears to be primarily influenced by the escalating geopolitical tensions in the Middle East, particularly Israel’s military actions against Iran. The fluctuations in global risk sentiment significantly impacted the Indian stock market, causing the Nifty 50 to drop by 0.68%, closing at 24,718.6, while the BSE Sensex also took a hit, falling by 0.70% to close at 81,118.6.

### Market Pulse Analysis

Market analysts are expressing concern regarding the state of Indian equity benchmarks. Vinod Nair, Head of Research at Geojit Investments, noted that downward pressure is stemming from weak global cues coupled with foreign institutional outflows. The recent military confrontation between Israel and Iran has heightened risk aversion among investors, leading to a more cautious trading environment.

Despite encouraging macroeconomic signals, such as India’s Consumer Price Index (CPI) for May easing below the Reserve Bank of India’s comfort threshold, these positive indicators were overshadowed by international issues. As Brent crude oil prices approached $76 per barrel—the highest they’ve been in 2023—concerns around inflation began to re-emerge.

### Global Markets Overview

The global market saw significant declines on Friday, with Wall Street closing sharply lower after Iran fired missiles at Israel in retaliation for Israeli attacks aimed at Tehran’s nuclear facilities. The S&P 500 index dropped by 1.13% to 5,976.97, while the Nasdaq and the Dow Jones Industrial Average fell by 1.30% to 19,406.83 and 1.79% to 42,197.79, respectively.

Similarly, European markets followed suit, with shares sinking across the board due to the rising military conflict. The pan-European STOXX 600 index fell by 0.9%, reaching a three-week low and recording its fifth consecutive decline—the longest losing streak since September 2024.

### Technical Insights

From a technical standpoint, market analysts are closely monitoring the Nifty index. Rupak De, a Senior Technical Analyst at LKP Securities, mentioned that the Nifty’s recent drop resulted in breaching the 21-exponential moving average (EMA), which is crucial for short-term performance. However, the index found a degree of support near its recent consolidation lows, leading to a strong intraday recovery.

Looking ahead, analysts are watching for a potential recovery. If the Nifty can sustain levels above 24,700, the index could see further upward momentum towards 25,000 in the short term. However, failing to maintain this critical support level may lead to renewed bearish sentiment in the market.

### Most Active Stocks

In terms of trading activity, certain stocks garnered heightened interest. Cochin Shipyard led the turnover with Rs 2,147 crore, followed closely by Jubilant Ingrevia at Rs 2,043 crore. Other notable mentions include BSE, SCI, and InterGlobe Aviation among the most actively traded stocks on the BSE in value terms.

Volumes also highlighted active trades, with Vodafone Idea recording the highest traded shares at 46.91 crore, followed by Reliance Power and Suzlon Energy.

### Market Sentiment

Overall market sentiment has adopted a bearish tone. Out of 4,122 stocks that traded on BSE on Friday, 2,595 closed lower, illustrating a market characterized by caution and pessimism. Investors are wary, leading to a trend where stocks are being sold off in reaction to external pressures.

### Conclusion

The outlook for the Indian stock market heading into Monday appears fraught with challenges. Geopolitical tensions, inflation concerns, and external market pressures all contribute to an environment of uncertainty. Investors are advised to remain vigilant and prudent in their strategies, weighing the risks as the situation develops.

As the global landscape continues to fluctuate, many will be paying close attention to how these factors unfold in the coming days, and whether the Indian stock market can regain its footing amidst the turbulence.

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