Markets Positioned for Gap-Up Opening Following Overnight Gains, Nifty Trades Above 24,600

Indian Markets Expected to Witness Gap-Up Opening on May 7

The Indian markets are likely to open with a gap-up on May 7, as GIFT Nifty was trading near 24,600 and Brent crude fell 9% to go below the psychologically important $100 per barrel mark. This comes after a strong rebound in the markets on Wednesday, driven by hopes of a possible deal between the US and Iran to end the war.

At 4:40 pm on May 6, GIFT Nifty was trading 0.5% higher at 24,644 and Brent crude was trading at $97. Meanwhile, Nasdaq 100 futures jumped 1.6% while those for the S&P 500 gained 1%, with both gauges set to build on record highs.

The developments in the US-Iran nuclear talks have had a significant impact on the global markets. According to Axios, Washington and Tehran are working on a memorandum that would set a framework for more detailed nuclear talks. However, nothing has been agreed yet, and the US expects Iranian responses on key points in the next 48 hours.

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The decline in Brent crude prices has had a positive impact on the Indian markets. Brent slid 11.3% to below $100 a barrel, easing some concerns over the hit to growth and inflation in Asia's third-largest economy. Government bonds rallied in Europe and the US, with the yield on 10-year Treasuries down nine basis points to 4.34%. The dollar hit the lowest level since February, and gold topped $4,700 an ounce, while Bitcoin rose for a seventh straight day.

The Indian shares advanced on Wednesday, with Benchmark Nifty 50 rising 1.24% to 24,330.95, while the BSE Sensex added 1.22% to 77,958.52. The indexes posted their biggest single-day gain since April 15.

Analysts believe that Nifty could easily hit 24,500 in the short term, and a decline in the volatility index will only support the ongoing bullish momentum. The markets have established a strong support zone around 24,000, which aligns with both the 21-DMA and 50-DMA. Additionally, Nifty has broken out of a symmetrical triangle pattern on the daily chart, indicating a positive shift in the short-term structure with potential upside towards 24,500 levels.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline