Indian benchmark indices are set for a cautious-to-positive start on Thursday, August 20, after a sharp recovery in global sentiment and stronger GIFT Nifty indications. The Nifty 50 had closed at 24,078.30 on Wednesday, down 0.32%, while the Sensex ended at 76,909.68, falling 0.42%.

GIFT Nifty signals a positive opening

GIFT Nifty was trading around 24,222 ahead of the Indian market opening, indicating a stronger start for domestic equities. The positive signal comes after the Nifty extended its losing streak to seven sessions on Wednesday.

Wall Street and global market cues

US equities ended modestly higher, while Asian markets also showed gains. The movement in US bond yields, the dollar, crude oil and global risk sentiment will remain important for Indian investors during Thursday's session.

FII and DII activity

Foreign institutional investors (FIIs) turned buyers on Wednesday, purchasing Indian equities worth around ₹408 crore. Domestic institutional investors (DIIs) were much stronger buyers, investing approximately ₹3,973.72 crore. Continued FII buying could provide additional support to the market after the recent selling pressure.

Crude oil remains a key concern

Elevated crude oil prices continue to be one of the biggest risks for Indian equities. Higher oil prices can increase India's import bill and put pressure on inflation, the rupee and corporate margins. The recent rise in oil prices has also increased concerns about inflationary pressures and the future direction of monetary policy.

Rupee and US bond yields

Investors will closely track the Indian rupee and US Treasury yields. A stronger rupee and easing US yields can improve sentiment toward emerging-market equities, while renewed pressure on the currency or a rise in global yields could weigh on domestic stocks.

RBI policy outlook

The Reserve Bank of India kept the repo rate unchanged at 5.25% at its August 5 meeting. However, policymakers indicated that rising oil prices and broader inflation risks could eventually require a tighter policy stance. The RBI has retained flexibility while monitoring inflation and growth.

What investors should watch today

The key factors likely to influence the Nifty 50 and Sensex on August 20 include:

1.GIFT Nifty movement at the opening

2.FII and DII buying or selling

3.Crude oil price movement

4.Rupee-dollar exchange rate

5.US bond yields and global equity markets

6.Banking and IT stocks

7.Geopolitical developments

Market breadth and volatility

Despite the possibility of a positive opening, analysts remain cautious because elevated oil prices and global geopolitical uncertainty continue to pose risks. Strong domestic institutional buying and improved global cues, however, could help the benchmarks attempt a recovery after their recent losing streak.