Indian stock markets are bracing for a gap-up opening on Tuesday, following the footsteps of Asian peers. However, US stocks settled mixed after jolts of trade tariffs. Besides the global turmoil, RBI's monetary policy due on Wednesday and India Inc's Q4 earnings will be the key factors guiding Dalal Street in the near-term.

Nifty futures on the NSE International Exchange traded 385.70 points or 1.73 per cent down, at 22,649, hinting at a positive start for the domestic market on Tuesday. Asian stocks rebounded from previous session's jitters as traders assessed strong performances of US technology stocks.

Siddhartha Khemka, Head - Research, Wealth Management at Motilal Oswal Financial Services expects the market to remain volatile on the back of ongoing global trade tension and potential further developments on the tariff front. "The Indian markets were relatively better placed compared to the Asian peers on account of lower tariffs and less reliability on US exports," he said.

The S&P 500 and the Dow closed lower after a roller coaster session. The Dow Jones Industrial Average fell 349.26 points, or 0.91 per cent, to 37,965.60, the S&P 500 new tab lost 11.83 points, or 0.23 per cent, to 5,062.25 and the Nasdaq Composite gained 15.48 points, or 0.10 per cent, to 15,603.26.

In the Asia Pacific region, Japan's Nikkei zoomed 6.5 per cent on Tuesday, while Hong Kong's Hang Seng gained more than 2 per cent. Australia's ASX 200, South Korea's KOSPI and New Zealand's DJ was up nearly 2 per cent each.

Despite potential foreign outflows, strong domestic liquidity—driven by monthly SIPs and DII participation—may help support the markets, said Narinder Wadhwa, Managing Director & CEO at SKI capital. "The overall market direction will still depend heavily on how global tariff disputes evolve," he said.

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 9,040.01 crore on Monday. On the other hand, domestic institutional investors (DIIs) turned net buyers of Indian equities to the tune of Rs 12,122.45 crore.

The dollar index was 0.3 per cent down on Tuesday, while the index is down 1 per cent since the tariffs announcements. The safe haven yen and Swiss franc held near six-month highs on Tuesday while the US dollar nursed broad losses as financial markets grappled with mounting recession worries.

Calling out top or bottom in the markets is always the most difficult thing to do. What one should focus on is the fundamentals, which is earnings trajectory and valuations, said Shiv Chanani, Senior Fund Manager- Equity at Baroda BNP Paribas Mutual Fund. "While the latter has come to reasonable levels on a broader basis, earnings growth trajectory is somewhat clouded by the current uncertain environment."

Nifty Outlook
In the short term, 22,000/72,400 would be the key level to watch. If the market manages to trade above this level, the pullback formation could continue up to 22,500-22,600/73,800-74,200, said Shrikant Chouhan, Head Equity Research at Kotak Securities. "On the flip side, a dismissal of 22,000/72,400 may lead to further weakness. Below this level, the market could retest the 21,800/71,800 mark, he adds.

Technically, a decisive close below the 21,700 level on the Nifty could pave the way for further downside toward 21,300, said Ajit Mishra, SVP at Religare Broking. "Any recovery attempt is likely to face resistance in the 22,500–22,800 zone. Given the prevailing volatility, traders are advised to adopt a hedged approach and manage position sizes cautiously until we see some stability," he said.

Nifty Bank Outlook
Bank Nifty in the process closed below the 20- and 50-days EMA. It has immediate resistance at 51,000 levels while key support to watch out on the lower side is 49,000-48,700, said Bajaj Broking. "Along with the development of US tariff policies, market participants will also keep a close eye on the RBI monetary policy outcome and resumption of Q4FY25 earnings season in the current week," it said.

The Bank Nifty index opened with a gap down but saw some recovery after initial volatility, eventually ending the session lower at 49,860, said  Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates. Technically, Bank Nifty index defended 50-DEMA support placed around 49,500 and formed a green candle on the daily chart.

"On the upside, the 50,650–50,750 zone will act as a key resistance area. A sustained move above 50,750 will be required to trigger a fresh rally in the index," he added.