The markets are bracing for a volatile session. The sharp sell-off in late trade and the GIFT Nifty indicate near-term swings for the market as India-Pakistan tension escalates. That apart, DIIs were net sellers in trade on May 8 even as FIIs were net buyers and all eyes will be on the news coming from the border. Most market observers maintain that long-term worries can be ruled out but investors are now keen about the near-term trend.
Call for cautious trade
Shrikant Chouhan, Head – Equity Research, Kotak Securities highlighted that, “Heightened border tensions and weak global cues dragged down markets and the rupee. Investors are advised to stay cautious, avoid aggressive positions, and focus on fundamentally strong stocks with limited near-term exposure to geopolitical risks. Defensive sectors and quality large caps may offer better stability in the current environment.”
Akshay Chinchalkar, Head of Research, Axis Securities explained that, “ Yesterday’s last hour selling in the Nifty was proof that the markets are getting jittery about the escalating conflict between India and Pakistan. The India VIX jumped 10% and marked its seventh straight gain, which means people are buying portfolio protection. The selling inflicted some short-term damage by sending the Nifty below 24,200.”
Crude price outlook
The crude price trend is another key factor that may dictate the broader trading direction today. The crude prices are flat after rising more than 3% as investors watch out for the US and China talks on trade negotiations over the weekend. US Treasury Secretary Scott Bessent will meet China’s top economic official Vice Premier He Lifeng in Switzerland on May 10 to work toward resolving trade disputes that have threatened growth in the consumption of crude oil. Separately, US President Donald Trump and British Prime Minister Keir Starmer announced Britain had agreed to lower tariffs on U.S. imports to 1.8% from 5.1%. The U.S. cut duties on British cars but left a 10% tariff on most other goods. Elsewhere, Reuters reported that the Organization of the Petroleum Exporting Countries and allies, OPEC+ plan to increase output which could keep pressure on oil prices.
RBI rate outlook
The consumption sector will also focus on the RBI rate outlook. The Reserve Bank of India is likely to cut a rates by another 50 bps through this fiscal. Most economists are of the opinion that the Reserve Bank will continue to take steps that help in pushing consumption and maintaining liquidity levels at a comfortable level.