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Markets to remain jittery amid Indo Pak tension! De-escalation may open the door for next leg of up move


Equity benchmark snapped three week's winning streak tracking escalated geopolitical tension and settled the volatile week at ~ 24000, down 1.4%. Consequently, Rupee tumbled sharply at 85.58. Sectorally, auto outperformed while Realty, PSU Bank remained under pressure
The heighten geopolitical tension fuelled the volatility in the market. As a result, India VIX witnessed highest weekly close since June-24, up 19%, indicating uncertainty in the market
What to expect: Amidst ongoing Indo Pak tension, we expect Nifty to consolidate in the broader range of 24500-23200 zone wherein stock specific action would prevail amid ongoing earning season. Meanwhile, all eyes will be on the de-escalation of arm conflict that would fuel the next leg of up move.
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.
In the current scenario, post the knee-jerk reaction, we believe market will stabilize. Hence, we advise not to panic but rather build quality portfolios from medium to long term perspective amid ongoing earning season
Our constructive view is further validated by following observations which would act as cushion:
Sustained FII's inflow
The completion of India-UK Free Trade Agreement
Bilateral Trade Agreement between India and US
Further weakness in US Dollar index and Brent crude oil prices
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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