Sensex, Nifty Eye Gains Despite Global Sell-Off: Key Market Triggers for August 4

Monday, August 4: Indian equity markets are poised for a cautious yet potentially positive start this Monday, despite a prevailing risk-off sentiment in global markets. This outlook is suggested by the GIFT Nifty, which traded flat with a slight positive bias in early Asian hours.

GIFT Nifty Trades Flat with Slight Positive Bias

As of 8:30 a.m. IST, GIFT Nifty was trading at 24,691.00, up by 22 points (0.09%), indicating a relatively stable opening for India’s benchmark indices. The index opened at 24,656, touched an intraday high of 24,695, and a low of 24,656, reflecting limited movement in early trade. Its previous close stood at 24,669, suggesting range-bound sentiment in the absence of strong overnight cues.

The GIFT Nifty, previously known as SGX Nifty, is a USD-denominated Nifty 50 futures contract traded on the NSE International Exchange (NSE IX) within Gujarat International Finance Tec-City (GIFT City). It serves as an early indicator for the Indian market, trading almost 21 hours a day and allowing global investors to react to international news outside Indian market hours.

Domestic Market Recap: Fifth Weekly Loss for Nifty

Indian benchmark indices concluded the previous week on a sharply negative note on 1st August. The Sensex shed 585.67 points, closing at 80,599.91, while the Nifty fell 203 points, ending at 24,565.35. This marked the fifth consecutive week of losses for the Nifty 50, its longest losing streak in two years, specifically since August 2023. This prolonged downturn signals persistent selling pressure and an underlying cautious sentiment among investors, driven by a confluence of domestic and global factors.

Global Markets: Risk-Off Mood Prevails

Global financial markets continue to be dominated by a risk-off sentiment. US markets plunged following weaker-than-expected job data and the imposition of sweeping new tariffs by the US President. The Dow Jones lost 542.40 points, the S&P 500 declined by 101.38 points, and the Nasdaq dropped 472.32 points. Asian markets were deep in the red, extending a seven-day sell-off, reflecting concerns over trade tensions and global economic growth.

Furthermore, oil prices dropped due to an anticipated OPEC+ production hike, while gold saw some profit-taking after its recent gains, indicating a rotation of capital in response to market uncertainties. The imposition of a 25% blanket tariff on Indian exports by the US, effective from 7th August, has particularly weighed on sentiment, with sectors like pharmaceuticals, electronics, and petroleum products facing significant headwinds. While some analysts suggest this might impact the US more than India in the long run, the immediate market reaction has been negative.

Fund Flows: FIIs Sell Again, DIIs Continue to Buy

• FIIs sold ₹3,366 crore worth of equities (10th straight session)
• DIIs bought ₹3,186 crore worth of equities (20th consecutive session).

Key Technical Levels to Watch

From a technical perspective, market participants will be closely monitoring key levels for the Nifty. Immediate support is identified between 24,535 and 24,500. A breakdown below this range could signal further downside, potentially leading to levels between 24,300 and 24,250.

The Relative Strength Index (RSI) being below 40 confirms bearish control, indicating that the index is in a weak momentum zone. The India VIX, a measure of expected market volatility over the next 30 days, rose by 3.75% to 11.97. While this indicates a slight increase in anticipated volatility, a reading below 13 generally implies relatively low panic levels among investors, suggesting that sharp, sudden crashes are not immediately expected.

However, the sustained low VIX in a falling market can also indicate complacency or a build-up of unhedged positions, which could lead to larger corrections if sentiment deteriorates sharply. Traders are advised to exercise caution and maintain strict risk management given the prevailing global headwinds and the Nifty’s extended losing streak.

What’s Ahead For Today?

• Cautious Optimism on the Cards
  Despite weak global cues, GIFT Nifty indicates a mildly positive start, suggesting domestic markets may attempt a technical rebound. However, sentiment remains fragile amid broader global uncertainty.
• Tariff Tensions in Focus
  With US tariffs on Indian exports set to kick in on August 7, sectors like pharma, IT, and electronics could remain under pressure. Any diplomatic updates or retaliatory measures from India will be closely watched.
• FII-DII Tug of War Continues
  While FIIs extended their selling streak for a 10th straight session, DIIs have remained consistent buyers. Today’s price action may depend on whether DII inflows can offset continued FII outflows.
• Technical Levels Are Crucial
  Nifty needs to hold the 24,500–24,535 support zone to avoid a deeper correction. A break below could lead to 24,300 or lower. On the upside, resistance is likely around 24,700–24,750.
• Volatility Still Contained — For Now
  India VIX remains below 13, indicating low fear in the market. But given the recent streak of losses and global headwinds, traders should remain cautious and hedge positions where needed.
• Stock- and Sector-Specific Moves Likely
  In the absence of strong index cues, action may remain stock-specific, particularly in sectors facing trade pressure or showing earnings resilience. Watch for FMCG and banking stocks as potential defensive plays.

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