The market snapped two-week rally and closed moderately lower for the week ended March 25 due to some amount of profit booking. Overall it was a consolidation week for the market as investors closely monitor developments related to the Ukraine war. Higher inflation worries, elevated oil prices amid supply concerns and tightening monetary policy by the Federal Reserve weighed on the market sentiment.
The BSE Sensex fell 502 points to 57,362, and the Nifty50 declined 134 points to 17,153, while the broader markets were largely flat. The BSE Midcap index was down 0.15 percent, while the Smallcap index gained a third of a percent.
Auto, Bank, Financial Services, and FMCG stocks hit hard in the passing week, while Metal hogged the limelight with a 5 percent rally, followed by Oil & Gas, IT and Energy stocks.
Indian markets after recent sharp recovery remained resilient despite global concerns as the Nifty50 consistently held above the crucial 17,000 mark. In the coming week, benchmark indices are expected to remain volatile given the monthly F&O expiry and keep a close watch on Ukraine war & oil prices for further direction and monthly auto sales data, experts feel.
"Markets are showing resilience amid uncertainty however deterioration in the global sentiment may again turn the bias. For any directional move in the benchmark, the participation of the banking index is critical, which is currently witnessing diverge trend," says Ajit Mishra, VP Research at Religare Broking.
Amid all, they reiterated a positive yet cautious stance on the market, says Mishra.
Yesha Shah, Head of Equity Research at Samco Securities also says with volatility high, markets are expected to remain largely rangebound and investors are advised to continue to invest in pockets with a reasonable margin of safety for the long term.
Here are 10 key factors that will keep traders busy next week:
The war between Ukraine and Russia for the former's invasion has continued for more than a month now. Moscow failed to meet its own expectations to invade Ukraine on time given the strong resistance from Kyiv forces and Ukrainians and hence Russian forces have consistently been using air and artillery bombardments to demoralise Ukrainian forces, increase fear among Ukrainians and destroy their infrastructure.
Hence, this war is expected to play a key role for market direction in coming weeks and if there is any resolution, by any chance, to this crisis then there could be a sharp rebound in equity markets globally, experts feel.
Click Here To Read All Live Updates on Ukraine-Russia Crisis
Considering the casualties in Ukraine due to aggressiveness of Russia to invade Ukraine, now several countries including European nations and US are thinking of reducing dependency on Moscow for oil & gas and also other commodities in coming years.
In the lastest news, as Russia is the third largest oil exporter and second largest natural gas producer, while speaking through video link at the Doha Forum conference, Ukraine's President Volodymyr Zelenskyy urged energy producing countries such as Qatar to hike their output, so "everyone in Russia understands that no one can use energy as blackmail." US President Joe Biden met people, who fled from Ukraine, in Poland on Saturday and asked for further unity of NATO allies against Putin over Ukraine invasion. (CNBC reported)
Oil Prices
Oil price, the crucial factor for emerging markets like India, remained elevated with international benchmark Brent crude futures closing above $120 a barrel, rising nearly 12 percent on week-on-week basis amid supply concerns. Apart from Ukraine-Russia crisis-led worries, media reports of a missile attack on an oil distribution facility in Saudi Arabia also weighed on the oil market sentiment.
The oil remains another major factor that needs to be closely watched by the street in coming weeks. Having a price above $100 a barrel is a major concern for India that imports 80-85 percent of oil. Experts feel this price level if it sustains for a longer period then there could be a major inflation risk for India and further correction in the equity market can't be ruled out given a risk to earnings and economic growth.
FII flows remained volatile in last few days as foreign institutional investors started buying Indian equities in small quantities given the reasonable valuations after recent correction which could act as a supportive factor for the market in the week gone by, but net net they continued to be net sellers for yet another week to the tune of more than Rs 5,300 crore worth of shares for the week ended March 25.
As a result, the outflow in March 2022, so far, at Rs 46,962 crore in cash segment was the highest in a single month since March 2020.
Experts strongly feel the FII flows could return to emerging markets including India if there is any resolution to the Ukraine war.
However, domestic institutional investors tried to offset some FII outflow by net buying shares worth more than Rs 2,800 crore during the week, taking total monthly inflow to Rs 34,441 crore in March.
Auto Sales
The market will also closely watch March auto sales data that will be released on the first of April (Friday). Overall experts expect numbers to be a mixed bag. Hence, auto stocks including Tata Motors, Maruti Suzuki, TVS Motor, Hero MotoCorp, Bajaj Auto, Ashok Leyland, M&M and Eicher Motors will be in focus.
The BSE Auto index, so far, corrected 4 percent in March, which in fact is the biggest loser among sectors during the month as stocks are in a double whammy now. Rising industrial metals prices are hurting margins despite taking price hike, while higher oil prices are raising concerns over demand.
"Taking into consideration that the automobile companies' monthly sales numbers are anticipated to be a mixed bag, D-Street will keep a close eye on those who miss estimates," says Yesha Shah of Samco Securities.
Economic Data Points
Fiscal deficit and infrastructure output for the month of February will be announced on Thursday, while foreign exchange reserves for the week ended March 25 will be released on Friday.
Technical View
The Nifty50 has formed bearish candle on the daily as well as weekly charts as the closing prices were below opening levels for both periods. The index was down 0.4 percent on Friday and 0.8 percent for the week.
The holding above the crucial 17,000 mark for last six consecutive sessions is largely an indication of positive bias for the market in coming sessions, but overall the index has been rangebound for last few sessions with a band of 17,000-17,450 levels, which experts feel needs to be broken on either side for directional move.
"The overall chart pattern remains intact as per daily timeframe chart and the positive chart pattern like higher highs and lows is also active. But, close look at intraday chart signals decreasing strength in upside bounces from near the support of 17,000 mark in the last couple of sessions. The inability of bulls to continue with sharp follow-through upmove post upside breakout of significant 16,800-17,000 levels could also be another cause of concern as of now," says Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
He further says a decisive decline below this area is likely to trigger downward correction and a sustainable move above 17,450 could open renewed buying interest in the market for next week.
F&O Cues
Experts expect some volatility in the coming week with closing of March derivative contracts and rolling over positions to next month, on Thursday. The Option data indicated that the index is expected to consolidate above 17,000 mark which could be crucial support, whereas 17,500 could be resistance level for the Nifty in the coming week.
On the Option data, maximum Call open interest was seen at 18,000 strike, followed by 17,500 & 18,100 strikes. Call writing was seen at 18,100 strikes, then 18,000 & 17,500 strikes, while Call unwinding was seen at 18,300 and 18,400 strikes.
In the Put option, maximum open interest was seen at 16,000 strike, followed by 16,500 & 17,000 strikes. Even Put writing was witnessed at similar strikes, while Put unwinding was seen at 17,300, 17,500 and 16,600 strikes.
"Due to a sharp up move, Call bases have distorted significantly in the last couple of sessions. However, considering the highest Put base of 17,000 strike where continued addition is visible, we believe the Nifty should find support around these levels and one can utilise any decline towards 17000 to create fresh longs," says ICICI Direct.
On the higher side, while immediate resistance may be experienced around 17,500, the major hurdle for the Nifty remains near 17,800, the brokerage adds.
India VIX
The volatility largely remained well above 22 levels in the passing week too. Hence, the volatile swings are expected to continue unless and until these levels are getting decisively broken on the downside and if it falls way below 20 mark then there could be more market stability, experts feel.
The India VIX, so-called fear index, increased by 3.6 percent to 23.43 on a week-on-week basis but corrected 31 percent from February highs.
Corporate Action
Here are key corporate actions taking place in the coming week:
Global Data Points
Aside from the data related to Covid outbreak in China, GDP growth rate and unemployment rate in the US will be closely watched in the coming week.
Here are key global data points to watch out for next week:
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