Indian markets are trading above key support levels and although a knee-jerk reaction cannot be ruled out it would not be strong enough to derail the trend.
The Indian market closed the week on a buoyant note with Nifty above 10400 and Sensex successfully reclaiming Mount 34K for the week ended 13 April but with the US, British and French forces launching air strikes on Syria, the bull run seen back home could come under threat.
US, British and French forces launched air strikes on Syria on Saturday morning in response to a suspected poison gas attack that killed dozens of people, aiming to degrade its chemical weapons capabilities in the biggest intervention yet in the conflict by Western powers.
More than 100 missiles were fired from ships and manned aircraft, the allies struck three of Syria’s main chemical weapons facilities, Reuters said quoting US Defense Secretary Jim Mattis and Joint Chiefs of Staff Chairman General Joseph Dunford.
Equity market does not like uncertainty and with a war-like situation, things could get really volatile for markets not just for India but across the globe.
“Historically, such attacks failed to derail the markets over a longer time horizon. But, in the short term markets may get rattled with such strikes. Hence, in other words, we can say that such incidents may provide a great buying opportunity for long-term investors,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
Besides, this kind of information is already in public domain, although US President Donald Trump backtracked his words on Syria earlier this week which led to a rally in equity markets.
The strikes risked raising tensions in an already combustible region, but appeared designed not to trigger a military response from Russia and Iran, said a Reuters report. Nevertheless, Assad’s government and Russia responded angrily.
Russian officials on Friday warned of “consequences” after President Trump announced his approval of US-led military strikes in Syria against the Russian-backed regime of Bashar al-Assad, Fox News said.
Technically speaking, Indian markets are on a sustainable pull back mode as they are breaching critical resistance points on the upside successfully on a daily basis. The index is trading above its 200-days moving average (DMA), and 100-DMA last week.
Mohammad further added that as of now it appears that market shall find buyers on dips and 10350 itself can act as a strong support and in the worst case we may go down towards 10100-kind of levels and not more than that because of this issue.
Should investors back in India be worried?
Indian markets are trading above key support levels and although a knee-jerk reaction cannot be ruled out it would not be strong enough to derail the trend.
Nifty has not shown any correlation to such events in past. Syria is a relatively smaller country to be worried about and its impact should be very minimal to negligible for Indian markets.
Syrian attack on markets would be minimal. The stock markets are valued with its future cash flows discounted to present value and unless the cash flows are dependent on such geographies, the impact on the stock market will not be significant.
“Syria is a crude oil exporter but its 34th on the rank for crude export and is not material enough to alter the crude oil price for any inter-correlation impact of the stock market with commodities.
Agarwal further added that if Nifty does witness a selling pressure, it should find support within the 10200 – 10100 zone. Put congestions are extremely high in 10300 and lower strikes and there doesn’t seem to be any un-winding pressure yet.
MORE WILL UPDATE SOON!!
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