Nifty Falls as Profit Booking Takes Hold Amid Subdued Domestic Market

Indian Markets on a Subdued Note as GIFT Nifty Drops 84 Points

The Indian markets are expected to open on a subdued note on Thursday, following a sharp rally on Wednesday. The GIFT Nifty, which is a key benchmark index, has dropped 84 points or 0.34 percent to 24,432 in early trade. This muted performance of the GIFT Nifty indicates a mildly negative start for the benchmark indices, despite strong global markets and easing geopolitical concerns.

The weak indication from the GIFT Nifty comes after domestic equities surged more than 1 percent in the previous session on hopes of a potential US-Iran agreement. Analysts have suggested that some profit booking at higher levels is likely after the sharp rebound, even as the broader global backdrop remains supportive.

Global Equities Continue Rally

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Global equities continued their rally overnight and in Asian trade. The MSCI's broadest index of Asia-Pacific shares outside Japan rose another 1 percent to a fresh record high, and is now up 7 percent this week. Japan's Nikkei crossed the 62,000 mark for the first time after reopening from a holiday, while South Korean and Taiwanese equities also hit record highs amid continued momentum in AI-linked stocks.

The Wall Street also ended at fresh record highs overnight. The S&P 500 climbed 1.46 percent to 7,365.09, while the Nasdaq surged 2.03 percent to 25,838.94, driven by strong earnings and gains in chipmakers after upbeat results from AMD. The Dow Jones Industrial Average rose 1.24 percent to 49,910.59.

Crude Oil Prices Remain Volatile

However, crude oil prices remain volatile despite hopes of a peace agreement. Brent crude, which plunged nearly 8 percent on Wednesday amid optimism over a possible US-Iran deal, edged higher again in Asian trade to around $102 per barrel. Iran said it was reviewing a peace proposal aimed at ending the conflict, although key issues such as reopening the Strait of Hormuz and Iran's nuclear program remain unresolved.

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Institutional Flows Continue to Remain a Pressure Point

Back home, institutional flows continue to remain a pressure point. Foreign institutional investors extended their selling streak on Wednesday, offloading equities worth Rs 5,834 crore, while domestic institutional investors bought shares worth Rs 6,836 crore, helping cushion the impact of foreign outflows.

Market Experts Weigh In

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the continued strength in US and Asian AI-driven markets is diverting global flows away from India. He cautioned that there is a high concentration risk in the AI trade globally, though a reversal in foreign portfolio outflows into India may happen only if the AI trade weakens or valuations become excessive.

Shrikant Chouhan, Head Equity Research at Kotak Securities, said the technical structure of the market remains positive after the Nifty decisively closed above the key 24,200 resistance level. According to him, as long as the Nifty holds above the 24,200-24,100 zone, the uptrend could continue towards 24,500-24,600 in the near term.