The market clocked more than 2 percent gains in a truncated week driven by positive global cues and $2.3-tillion infrastructure package announced by the US President Joe Biden. Strong auto sales numbers and healthy buying across sectors supported the market, but the rising coronavirus infections limited the upside.
The BSE Sensex rallied 1,021.33 points, or 2.08 percent, to 50,029.83, and the Nifty50 climbed 360.05 points, or 2.48 percent, to 14,867.35, while the broader markets outpaced frontline indices. The BSE Midcap index was up 2.73 percent and the Smallcap index gained 3.91 percent.
The market is expected to get support from global cues given the US stimulus package, but the bond yields and rising number of COVID-19 cases worries may add to volatility, experts feel.
"In the coming week, markets are likely take cues from global peers. We believe positive bias could continue as global markets have witnessed renewed buying interest on the back of stimulus package announcement in the US," Ajit Mishra, VP Research at Religare Broking told Moneycontrol.
"Also, domestic investors' mood remains buoyant on hopes for a strong corporate earnings outcome. Meanwhile, rising bond yields and Covid related updates will be key monitorable," he said.
Domestic institutional investors supported the market in the truncated week as they have net bought nearly Rs 4,000 crore worth of shares, though FIIs net sold Rs 767 crore of shares.
Here are 10 key factors that will keep traders busy in the coming week:
The Monetary Policy Committee (MPC) will conclude its three-day meeting on April 7 and experts feel is likely to continue with accommodative stance given the second wave of COVID-19, and the commentary over economic growth and inflation would be key to watch out for.
"In all probability MPC would keep the rates intact with an accommodative stance. When the economy is showing early signs of revival RBI and the MPC would ensure that growth momentum is maintained and it would facilitate the same by taking measures for effective transmission of the cheap credit," Ajit Banerjee, Chief Investment Officer at Shriram Life Insurance told Moneycontrol.
"We need to watch out for the MPC's stand on their view on the present inflation level and if there is any indication on the time frame by which liquidity may start getting tightened and how long it would like to maintain the accommodative stance taken," he said.
Coronavirus Ghost Strengthens
The coronavirus risk seems to be increasing day-by-day as the second wave of COVID-19 has gradually been spreading fast in some parts of the nation, though there has also been an increase in vaccination.
By Friday, India reported 89,129 COVID-19 cases, as per the Union Health Ministry, the highest level in last six months, which increased from 15,000 cases a day in early March. Maharashtra is leading in daily case count (47,913), accounting for nearly half of daily India count, followed by Karnataka, Chhattisgarh, Delhi, Tamil Nadu, Uttar Pradesh, Punjab, Madhya Pradesh, Gujarat, Kerala, Haryana and West Bengal.
The Friday's death count of 714 was highest since October 21, 2020. With this total case count reached over 1.23 crore with more than 1.64 lakh deaths. Given the increase in cases, there has been lot of restrictions imposed by several states including night curfew, gatherings, ban on hotels & malls etc, which experts feel could impact the economy a bit in coming months, though the vaccination across the country is going on since January.
Globally also the case count has been increasing in some parts of Europe, Brazil etc. More than 13.03 crore cases, so far, have been reported worldwide with over 28.39 lakh deaths.
The US bond yield has been moving in the range around 1.7 percent and gained nearly 4 percent in the last one week amid improving outlook on US economic recovery. The dollar index, which measures the value of US dollar to a basket of six leading global currencies, increased to 93 from 91 levels in last one month.
Experts feel the rising bond yields could impact some FII flow to emerging markets, but overall the indication of improving economic recovery is a positive factor for emerging markets.
"Rising bond yields in US is driven by improving outlook on economic recovery. Though this could strengthen dollar and create volatility in emerging markets in the short term, the revival in US economy is good news for equities in general," Gaurav Dua, SVP, Head - Capital Market Strategy at Sharekhan by BNP Paribas told Moneycontrol.
"In the past also, there have been phases of strong economic growth globally accompanied by rising bond yields but equity markets also doing well. So as long as there is orderly movement in bond yields it should not spoil the party in the emerging market equities," he said.
The March quarter earnings season will kick off soon, so the gradually the focus will shift to earnings. So far experts feel the corporate numbers could be strong following better-than-expected numbers in previous three quarters.
"The upcoming Q4FY21 earnings season will begin in a week’s time, so investors' focus will be shifting back to fundamentals. This time investors' expectations are rife for a strong earnings season led by healthy demand recovery and low base effect. On earnings front, revenue growth, margins expansion and management commentary will be key things to watch out," Ajit Mishra of Religare Broking said.
Economic Data Points
The Markit Manufacturing PMI data for March will be released on Monday, while Markit Composite and Services PMI for March will be announced on Wednesday.
Bank loan and deposit growth for the fortnight ended March 26, and foreign exchange reserves for the week ended April 2 will be released on Friday.
IPO and Listing
The primary activity will begin in the financial year 2021-22 with Macrotech Developers (formerly known as Lodha Developers) IPO which will open on April 7 and will close on April 9. The price band for the offer has been fixed at Rs 483-486 per share. The company is planning to raise Rs 2,500 crore through its initial public offering which would be used for repaying of debts and acquisition of land or land development rights.
Barbeque Nation Hospitality is expected to debut on the bourses on April 7.
The Nifty50 gained 1.2 percent on Thursday and formed bullish candle which resembles Hanging Man kind of pattern on th daily charts, while there was a small bullish candle formation on the weekly scale as it gained 2.5 percent during the truncated week.
Experts expect the trend to remain positive amid rangebound trade but feel the index needs to decisively surpass 15,000-15,100 levels to get the strong bullish bias.
"On a daily basis, the Nifty closed above the 20-day average and so the Nifty can now challenge the peak of 15,335. As per candlestick formation, the market has formed a bullish continuation formation that might send the market to minimum of 15,100 levels. Also, on a weekly basis, the level of 14,880 has been broken, indicating a rally. The next level 14,600 would be considered a significant support area," Shrikant Chouhan, Executive Vice President at Equity Technical Research at Kotak Securities said.
"A positive move in global markets, a drop in bond yields and a slight easing in the dollar index could help the Nifty to move beyond the 15,450 levels. Below 14,600, Nifty would retest the levels of 14,400 or 14,250," he advised. The strategy should be to buy on dips with a stop loss at 14,600, he advised.
The options data indicated that the Nifty50 could see a wider trading range of 14,500 to 15,200 levels in the coming days.
"Nifty futures closed the week with gains of 0.27 percent with decline in futures Open Interest (OI) by 5.11 percent on a weekly basis which indicates short covering in the index. During the week, Put Call Ratio (PCR) based on Open Interest of Nifty moved in between 1.10 to 1.36 levels and closed the week at its higher band," said Chandan Taparia of Motilal Oswal.
On option front, maximum Put open interest was seen at 14,000 followed by 14,500 strike while maximum Call open interest was seen at 15,000 followed by 16,000 strike. Call writing was seen at 15,000 then 15,100 strike while Put writing was seen at 14,500 then 14,200 strike.
"Post February, we have seen continued decline in volatility index, which suggests more of a consolidation in broader markets and the Nifty has been largely in the range of 14,500 to 15,200 since then. A major change of trend may be seen once the Nifty moves out of this range. While stock specific moves are likely to continue in the upcoming result season, we expect the Nifty to remain largely in this range," ICICI Direct said.
India VIX has been moving around 20 levels for last few sessions, falling by 3.24 percent from 20.65 to 19.98 levels on week-on-week basis. "VIX needs to sustain below 20 mark for the bullish grip and smoother move in the market," said Chandan Taparia.
Here are key corporate actions taking place in the coming week:
Global CuesHere are key global data points to watch out for next week: