Markets To Open Strong On Tuesday; BJP Wave In Bengal Boosts Sentiment

Mumbai, May 5: Indian stocks are likely to open firm on Tuesday amid positive domestic political developments and broad Asian market strength. Stocks are likely to track an edge with oil rallying on escalating tensions between US and Iran.

Gift Nifty May 26 futures contract was up 9 points or 0.04% at 24,076.50 at 8:13 am. If this momentum sustains, Nifty 50 could open above 24,100 resistance for the day as it recovered well from daily lows during Monday’s session.

Domestic Factors
The major domestic factor likely to drive sentiment on Tuesday is the stellar performance of BJP in West Bengal assembly elections results which came out on Monday. Markets have reacted positively to Narendra Modi-led BJP’s victories in elections so far, viewing them as a continuation of policy stability at the Centre.

Iran-US Tensions Escalate Over Strait of Hormuz
The U.S. and Iran launched new attacks in the Gulf on ​Monday as they wrestled for control over the Strait of Hormuz with duelling maritime blockades, shaking a fragile truce.

The fresh volleys of missiles and drones came after U.S. President Donald Trump launched a new effort to ‌get stranded tankers and other ships through the strait.

Asian Markets
Asian markets were trading mostly higher on Tuesday morning which could further support Indian markets. Japan’s Nikkei 225 was up 0.38% to 59,513, Shanghai composite gained 0.11% to 4,112 and Pakistan’s KSE 100 added 0.59%. Indonesia’s JSX rose 0.22% and Malaysia’s KLCI surged 0.76%. However, Australia’s ASX All Ordinaries traded 0.43% lower and Hong Kong’s Hang Seng Index declined 0.87% as Asian investors chose to tread carefully around Gulf tensions.

US Stocks
US stocks ended sharply lower on Monday as Iran’s aggressive attacks in the Gulf came to haunt investors. Dow Jones Industrial Average slumped 1.13% to 48,941, S&P 500 dropped 0.41% to 7,200 and Nasdaq declined 0.19% to 25,067.

Oil Prices
Oil prices jumped nearly 6% on Monday which could weigh on the Indian market. Iran continued its attack on UAE ports and tankers in the Gulf on Monday driving global crude oil prices higher. Brent crude surged $6.27 or 5.8% to settle at $114.44 per barrel while WTI gained $4.48 or 4.4% to $106.42, which could again fuel India’s inflation woes as the country imports more than 85% of its oil requirements.

Monday’s Trading Wrap
Indian markets ended strong on Monday led by strong buying in autos, FMCG and select bank stocks helped by BJP’s decisive victory in West Bengal assembly elections and some intraday easing in crude prices. Sensex advanced 355.90 points or 0.46% to 77,269.40 and Nifty 50 scaled above 24,100 resistance to end at 24,119.30, higher by 121.75 points or 0.51%. However, buying eased in the latter half of the session as traders booked profits. Midcap and Smallcap indices also traded marginally higher.

Source: nseindia.com