Indian benchmark indices Sensex and Nifty erased initial losses and edged higher on March 18 supported by strength in largecaps. Analysts expect markets to consolidate this week as investors await US Federal Reserve's interest rate outcome and other macro-economic data.
Sensex and Nifty rose 0.1 percent each to 72,739 and 22,050 respectively on March 18. About 1,884 shares advanced, 1,570 shares declined, and 110 shares were unchanged.
Analysts at ICICI Securities expects Nifty to extend consolidation this week in the range of 21,700-22,400 zone with positive bias, amid stock specific action. "Such consolidation over next few weeks would set stage for next leg of up move, supported by Nifty heavyweights, as we expect Nifty to head towards target of 22,700 in April 2024," they added.
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On the other hand, Anand James, Chief Market Strategist, Geojit Financial Services said that a decisive close above 22,400 for Nifty can confirm resumption of the 22,300 run. "On the downside, the 21,900 region will not stand a repeat attack, which could line up 21,670 as the first objective, and 20,250 later, should we see a tumble," he opined.
Investors continued to exit mid-and smallcap stocks amid concerns of stretched valuations and stress test results of mutual funds. The Nifty Midcap 100 and Nifty Smallcap 100 indices declined up to 0.5 percent. Fear gauge, India VIX jumped over 1 percent to trade nearly above 14.
Sectorally, Nifty Metal was the top performer as it rose over 2 percent, followed by Nifty Auto and Nifty Media indices. On the flipside, Nifty IT was the worst sectoral performer as it declined by over a percent.
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US Fed's interest rate outcome next key watch out
The US Federal Reserve's interest rate decision will be keenly tracked by investors on March 20. According to CME FedWatch tool, around 99 percent market participants are pricing in that the global central bank would leave interest rates unchanged at 5.25-5.5 percent. However, economic projections and rate cut timing will be keenly watched out for.
According to a Reuters poll, economists predicted the US Fed to start cutting interest rates in June as the central bank awaits more data to confirm whether inflation is heading convincingly towards 2 percent target.
The movement in US bond yields and dollar index post US Fed's interest rate decision will also influence equity trends.
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