Nifty may open in green on Independence Day eve; why investors shouldn’t chase the first tick

New Delhi: Indian equities are likely to open flat to mildly higher on Friday, with GIFT Nifty trading above the Nifty 50’s previous close as positive global markets and softer crude prices offer support. GIFT Nifty August futures were at 24,436.50 at 6:35 am, down 26.50 points or 0.11 per cent from their previous futures close. However, the contract remained about 41 points above the Nifty 50’s Thursday closing level of 24,395.85, indicating a modestly positive opening rather than a strong gap-up. The Nifty ended Thursday 40.10 points, or 0.16 per cent, lower at 24,395.85, extending its decline for a third session. The Sensex moved differently, gaining 113.61 points, or 0.15 per cent, to close at 78,079.96. Mid- and small-cap indices also ended marginally higher, showing that the weakness was not uniform across the market. Friday’s opening, however, has stronger global support than Thursday’s session. Wall Street ended at record levels overnight after softer US wholesale inflation reduced fears of an immediate Federal Reserve rate hike. The S&P 500 gained 0.7 per cent, the Nasdaq rose 0.8 per cent and the Dow added 0.1 per cent. The US 10-year Treasury yield also eased to 4.65 per cent. Asian markets picked up that momentum early Friday. South Korea’s Kospi opened around 2.7 per cent higher, led by large semiconductor stocks, while Japan’s Nikkei was also trading firmly higher in early deals. Crude offers relief, but Hormuz risk remains Oil is the biggest positive change from the previous session. Brent crude fell 2.15 per cent on Thursday to settle at $87.07 a barrel, while US WTI dropped 2.4 per cent to $81.25. Prices weakened after a large increase in US crude inventories and softer global demand projections. Lower oil prices are particularly important for India because they ease pressure on the import bill, inflation and the rupee. The relief remains fragile. The US and Iran continue to make competing claims over control of the Strait of Hormuz, while supply risks have also increased after reported Houthi attacks on Saudi energy infrastructure. Any fresh escalation could quickly reverse the fall in crude and change the market mood. Foreign selling remains a drag Institutional flows remain another key trigger. Foreign investors were net sellers of Indian equities worth Rs 510.69 crore across NSE, BSE and MSEI on Thursday. Domestic institutional investors bought a net Rs 4,353.09 crore, providing a substantial counterweight to overseas selling. The rupee will also be watched after it weakened to around 95.40 against the dollar on Thursday amid foreign selling and geopolitical concerns. A combination of a weaker rupee and renewed FII selling could again limit gains even if global cues remain positive. What could decide Friday’s trade? The first test will be whether Nifty can sustain levels above Thursday’s close after the opening rather than giving up early gains. Banking and heavyweight stocks will remain important because Thursday’s index movement was uneven despite gains in the broader market. Technology shares could receive support from the overnight Nasdaq rally and strong gains in Asian semiconductor stocks. Crude below Thursday’s highs is another positive, but traders will remain sensitive to any fresh Iran-Hormuz development. US retail sales data due later on Friday will not affect the Indian opening but could influence global sentiment during the session and ahead of next week. What should retail investors do? Retail investors should not treat a positive GIFT Nifty signal as confirmation that the market will remain higher through the day. The previous session itself showed how quickly the opening direction can change. Investors with a long-term horizon should focus on company earnings, valuations and portfolio allocation rather than trying to predict the first 15 minutes of trade. Those trading short-term volatility should avoid excessive leverage when geopolitical headlines can move crude, currencies and indices rapidly. For investors looking to deploy fresh money, staggered buying can reduce the risk of entering entirely at one level when the Nifty remains volatile around 24,400. Friday therefore begins with better global conditions than the previous session, but the market still has to overcome foreign selling, a weak rupee and the unresolved Middle East risk before a sustained recovery can take shape.