Sensex, Nifty likely to open lower as Gift Nifty flashes caution

Indian equity benchmarks BSE Sensex and NSE Nifty are set to open lower on Thursday, as Gift Nifty futures pointed to a subdued start. The index futures, traded on the NSE International Exchange, were down in early deals, signalling caution among investors.

Gift Nifty signals weakness

Gift Nifty futures were trading around the 24,350 level, down from the Nifty’s previous close of 24,410. The decline suggests a gap-down opening of about 50-60 points for the domestic benchmark.

The Gift Nifty, an offshore derivative contract based on Nifty 50, is often used as a proxy for market sentiment ahead of domestic trading hours. Its current weakness reflects a lack of strong buying interest at higher levels.

Global cues remain mixed

Overnight, US markets ended mostly flat, with the Dow Jones edging up 0.1% while the S&P 500 slipped marginally. Asian peers were trading mixed on Thursday morning, with Japan's Nikkei and China's Shanghai Composite showing mild gains, while Hong Kong's Hang Seng was flat.

Investors are cautious ahead of key US economic data due later this week, including jobless claims and manufacturing figures. Any negative surprise could impact risk appetite across emerging markets like India.

Domestic factors offer little support

On the domestic front, no major macroeconomic data or policy announcements are expected on Thursday. Foreign portfolio investors (FPIs) remained net sellers in the previous session, adding to the cautious mood.

Oil prices, which have a bearing on India's import bill and inflation, were steady near $82 per barrel for Brent crude. The rupee traded in a narrow range against the dollar, offering no clear direction.

What analysts are watching

Market participants are keeping an eye on sectoral rotation. Banks and auto stocks, which have seen profit-booking in recent sessions, may remain under pressure. However, select IT and pharma stocks could see buying interest on dips.

Technical analysts note that the Nifty has support at the 24,200-24,250 zone, while resistance is placed at 24,550-24,600. A break below support could trigger further selling, while a hold above it may lead to consolidation.

Stock-specific action is likely, with quarterly earnings announcements from mid-cap companies keeping traders busy. The broader market breadth is expected to remain cautious.

Volatility, as measured by the India VIX, stayed elevated near 14.5, indicating that traders are pricing in potential swings. Options data suggests that the 24,300 strike has seen significant put writing, indicating a floor for the Nifty.

For the day, traders are advised to stay nimble and avoid aggressive bets. The session may see range-bound moves unless a fresh trigger emerges from global or domestic news flow.

What to watch: The next major cue for markets will come from the US GDP data due later this week, as well as any fresh moves by foreign investors. Until then, the market may remain in a wait-and-watch mode.