Nifty Extends Recovery Amid Geopolitical Risks and Yield Uncertainty

Index Update: The Nifty 50 Index closed at 24,102.90, extending its recent recovery while remaining above its 63-day SMA of 23,676.56, indicating that the broader trend remains constructive. Momentum conditions improved, with the 14-day RSI at 59.65, moving above its average of 48.81 and reflecting stronger near-term market sentiment. Immediate support is placed near 23,861.87, with the next support level at 23,620.84. On the upside, immediate resistance is seen around 24,343.93, while the next resistance level is located near 24,584.96. A decisive move beyond these levels could influence near-term market direction.

Macro Update: India’s 10-year government bond yield hovered near 6.8%, pausing its recent decline as lower crude oil prices and robust foreign inflows supported bond demand. However, uncertainty surrounding the US-Iran situation, inflation risks from El Niño, and elevated global yields capped gains. Investors also await Bloomberg’s decision on Indian bond index inclusion.

Top Market Movers: On Monday, Cipla Ltd. (NSE:CIPLA) led the gainers with a 4.73% increase, closing at INR 1,415.70 followed by Tech Mahindra Ltd. (NSE:TECHM)  up 1.82% at INR 1,435.20 and Dr. Reddy's Laboratories Ltd. (NSE:DRREDDY) which rose 1.46% to INR 1,290.70. On the downside followed Asian Paints Ltd. (NSE:ASIANPAINT) saw the largest drop, falling 2.16% to INR 2,674.00 followed Titan Company Ltd. (NSE:TITAN) down 1.07% to INR 4,372.50 and Nestlé India Ltd. (NSE:NESTLEIND) which dropped 0.91% to INR 1,401.90.

Commodity Update: The U.S. Dollar Index remained near a one-year high on Monday as investors assessed ongoing geopolitical developments and trade disruptions. Shipping activity through the Strait of Hormuz continued to face delays, while initial talks between U.S. and Iranian officials under an interim peace arrangement encountered difficulties. Gold rose 0.80% to USD 4,206.20 per ounce, silver advanced 1.28% to USD 65.73 per ounce, and copper gained 0.41% to USD 13,654.00 per tonne. Brent crude oil increased 0.67% to USD 81.11 per barrel amid continued tensions surrounding U.S.-Iran relations.

Our Stance: Market sentiment remains cautiously positive as the Nifty 50 sustains above key moving averages and momentum indicators continue to improve. However, elevated geopolitical uncertainty, volatile crude oil prices, and global yield pressures may limit upside. Sustained strength above resistance levels could support further gains, while investors are likely to remain focused on macroeconomic developments and foreign capital flows.

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