Indian markets conduct disaster recovery test amid improved sentiment and positive FIIs

Mumbai (Maharashtra) [India], May 18 : In an important step to ensure operational resilience, the National Stock Exchange (NSE) and the BSE are conducting a special live trading session on Saturday to test their disaster recovery mechanisms.

The session split into two parts, will involve an intra-day switch from the primary site to the disaster recovery site for both equity and equity derivative segments.

The aim is to evaluate the participants' ability to handle disruptions and to ensure robust contingency measures are in place.

Ajay Bagga, banking and market expert, commented on the session, stating, "Indian markets have a disaster recovery testing live trading day today. With India Vix declining to under 20, and FII net flows turning positive for the secondary markets on Friday, the outlook has turned slightly less cautious."

The timing of this test coincides with a market holiday on Monday due to Phase 5 of the National Elections in Mumbai. Consequently, volumes are expected to be low today as institutions participate primarily to meet contingency business continuity requirements.

Recent market trends have shown recovery over the past four days, and sentiment has improved following Phase 4 of the National Elections.

Bagga anticipates this positive sentiment to consolidate further, with a decisive upward break likely only after the election results are announced on June 4th late evening.

He said, "Indian markets have recovered over the last four days and the sentiment has improved post Phase 4 of National Elections. Expect this positive sentiment to consolidate, but a decisive break upwards, above the previous all-time high levels will happen once the election results are announced by June 4th late evening."

On Friday, domestic equity benchmarks closed higher, with the Nifty 50 finishing above 22,450. The Sensex increased by 253.31 points (0.34 per cent) to close at 73,917.03, while the Nifty 50 rose 62.25 points (0.28 per cent) to 22,466.10.

The Nifty 50 formed a small positive candle on the daily chart, suggesting a high wave type candle formation, indicative of a positive market sentiment as it closed above Thursday's high of 22,432.

Varun Aggarwal, founder and managing director, Profit Idea, said, "The Nifty faces resistance at the 22,500 level, where significant open interest on the call side exists. A decisive break above this level is required for the index to reach its all-time high. Support is currently at 22,300, with dips viewed as buying opportunities. The index trades above its 20-day SMA and has formed a 'Piercing Line' pattern on the weekly chart, with an RSI of 62."

Internationally, the markets also showed mixed trends. The Dow Jones Industrial Average closed above 40,000 for the first time, gaining 134.21 points (0.34 per cent) to reach 40,003.59.

The S&P 500 edged up 6.17 points (0.12 per cent) to 5,303.27, while the Nasdaq Composite fell slightly by 12.35 points (0.07 per cent) to 16,685.97.

Today's special trading session is critical for ensuring the resilience and preparedness of India's financial markets.

With positive FIIs and declining volatility, the outlook for the Indian markets appears cautiously optimistic, poised for a potential breakthrough following the election results.

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