India equities find support despite Iran tensions and oil spike
Indian benchmark indices held the 24,000 support level as softer US inflation boosted foreign capital prospects, offsetting upward pressure on crude oil from escalating US-Iran military strikes.
The Nifty 50 closed lower despite early gains, holding the 24,000 level as a floor against escalating geopolitical tensions in the Middle East. The BSE Sensex initially surged 553 points to 77,603.57 and the Nifty climbed 148.15 points to 24,198.40, driven by banking stocks, before paring gains during the weekly expiry session.
The market's ability to limit losses stemmed from softer-than-expected US inflation data, which reinforced expectations that the Federal Reserve will hold rates steady. For emerging markets like India, a less aggressive Fed reduces pressure on the US dollar and improves the outlook for foreign capital inflows.
These macro tailwinds were tested by a 1.4% rise in Brent crude to around $86 a barrel. Prices climbed after US President Donald Trump reinstated a naval blockade on Iranian ports, prompting retaliatory strikes from Tehran on US infrastructure and raising concerns over the Strait of Hormuz.
Traders are navigating a tight range until a clear catalyst breaks the deadlock. The Nifty is expected to trade between 23,500 and 24,500, with immediate resistance at 24,200 and 24,300. BankNifty is similarly constrained, consolidating between 57,000 and 58,500.
The India VIX is rising but remains below the 16 level that would signal broader downside risk. Elevated foreign institutional investor short positions, standing at 2.55 lakh contracts, further suggest limited upside volatility in the near term.
Within this range-bound environment, derivatives traders are finding opportunities in specific names. Jay Thakkar of ICICI Securities highlighted RBL Bank futures, which are trending above their 370 max pain support with a 400 price target. He also pointed to PG Electroplast futures, noting a breakout and long buildup supported by a 580 max pain level.
The pharmaceutical sector is also attracting bullish positioning. Mankind Pharma futures are consolidating after recent long additions, with options data suggesting potential call unwinding above the 2,500 strike that could push the stock toward 2,600. Broader mid-cap sentiment remains positive, with the Nifty Midcap Select index breaking out to the upside as long as it holds 14,300.
