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Geopolitical volatility to provide re-entry opportunity

ICICIdirect Research 25 Apr 2025 DISCLAIMER

Equity benchmark pared initial gains tracking geopolitical worries. Nifty settled the week at 24100, up 1.2%. Broader market relatively outperformed as Midcap gained 2.6%. Meanwhile, beaten down IT index staged a strong recovery post Q4 earnings, up 7% for the week 

What to expect: In the upcoming truncated week, we expect volatility to remain elevated tracking geopolitical worries wherein Nifty is likely to consolidate in the broader range of 24500-23300 zone. We believe, over past two months index has formed a durable bottom. Hence, we believe, ongoing breather would help index to form higher base by cooling off the overbought condition after 12% rally seen over past three weeks and make market healthy

For the coming week, strong support is placed at 23300-23000 zone. Meanwhile, on the upside, 24500 would continue to act as immediate resistance

War History: Over past three decades there have been three major instances of escalations due to armed conflicts in India (i.e. Kargil War, 26/11, Pulwama attack). On each occasion it formed major bottom once anxiety around the event settled down and garnered decent return in next 3 months. Even in current scenario, possibility of knee-jerk reaction on escalation of geopolitical worries cannot be ruled out. However, historical evidences suggest that market will eventually stabilise. Hence, we advise not to panic but rather build quality portfolios from medium to long term perspective amid ongoing earning season

Key monitorable which would act as tailwind:

  • Bilateral Trade Agreement between India and US
  • Continuation of FII's inflow
  • Further weakness in US Dollar index post breakdown from two years consolidation
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