Markets Struggle Near Historic Levels Amid Mixed Signals

Indian stock markets opened flat on Tuesday, struggling near record highs due to selling by foreign portfolio investors and buying by domestic institutions. Despite RBI interventions and supportive global signals, indices failed to sustain gains. Experts predict cautious movement unless key resistance levels are overcome.

Indian stock markets opened the day flat on Tuesday, with indices caught between foreign portfolio investors' selling pressure and domestic institutions' buying. This tug of war has kept indices from sustaining gains beyond record levels. The Nifty 50 index commenced trading at 25,998.50, gaining 39 points, or 0.15%, while the BSE Sensex saw a 108.22-point rise to 85,008.93, up 0.13%.

Market observers highlighted that even as the benchmark indices approach all-time high marks, they have been unable to hold their momentum, stalling near the critical 26,000 level. According to Ajay Bagga, a banking and market expert, Indian markets remain range-bound due to FPI activities and other market dynamics dampening liquidity and performance.

Bagga pointed out that FPIs hold a net short position of 85%, with the rupee gaining strength following the Reserve Bank of India's (RBI) recent interventions. He noted that the RBI Governor's remarks about the possibility of a rate cut on December 5th could positively impact rate-sensitive sectors such as auto, realty, and financial industries. Additionally, global recovery in IT spending could lead to a reevaluation of the IT sector.

During early trading in the broader NSE market, the Nifty 100 remained flat, and both the Nifty Midcap and Smallcap indices showed positive movement. A mixed performance was seen across sectoral indices, with slight gains and losses recorded.

Technical analysts reported strong resistance near the upper trading range. Enrich Money CEO Ponmudi R remarked that the Spot Nifty 50 continues to test a multi-month trendline that has resisted previous breakout attempts. The index closed at 25,959, and holding above 25,900 suggests a positive broader trend. However, a close above 26,150-26,180 is needed to confirm a breakout and push the index towards higher levels.

Global markets provided supportive cues as the US market rebounded strongly, especially technology stocks, following favorable statements from Federal Reserve officials about a potential December rate cut. Asian markets showed strength in early trading on Tuesday.

(With inputs from agencies.)