Macro data, F&O expiry, global cues, among key market triggers this week

Domestic equity benchmarks traded volatile – witnessing a roller-coaster move amid mixed cues last week before closing the week in positive territory by gaining nearly half a per cent. Initially, prices declined to a five-week low amid escalating concerns about froth building in the midcap and smallcap segments. The pressure on select heavyweights pushed the index lower in the middle.

Also Read: FPIs pump ₹38,098 crore in Indian equities, debt inflows at ₹13,223 crore; Will the trend continue in FY25?

Markets saw buoyancy on the global front triggered a rebound in the final sessions, which aided the index to close in the green. The indices rebounded as bargain hunters stepped in following the announcement from US Federal Reserve indicating a potential series of interest rate cuts throughout the year.

Nifty 50 and Sensex prices settled the week at 22,096.75 and 72,831.94 up 0.33 per cent and 0.26 per cent respectively. A mixed trend on the sectoral front kept the participants occupied wherein realty, auto and metal posted strong gains while IT and FMCG settled in the red. The broader indices also witnessed respite and gained around 1.5 per cent each.

‘’The IT sector faced headwinds driven by global slowdown in spending. Investors redirected attention towards the realty sector, which emerged as the top performer of the week. The bounce is expected to continue in the short-term as traders punt to buy when the market is trading at oversold territory. However, concerns persisted regarding inflated valuations in mid and small-cap stocks. Large caps are expected to outperform in the medium term,” said Vinod Nair, Head of Research, Geojit Financial Services.

Also Read: Dividend Stocks: REC, SBI Cards & Payments, CRISIL, among others to trade ex-dividend next week; check full list

Week ahead, the primary market will be buzzing as several listings are slated across the small-and-medium enterprises (SME) segment. New new initial public offerings (IPO) across the mainboard and SME segments will open for subscription. The week will be crucial from domestic and technical point of view as fiscal closing will likely bring government announcements.

Overall, analysts expect volatility to remain high due to the scheduled expiry of March month derivatives contracts, and expect Nifty 50 to be in the range of 21,750-22,350 in the upcoming holiday-shortened week. 

The truncated week includes market closures on both Monday for Holi and Friday for Good Friday, so analysts say that trading volumes may be lower with limited market cues. Experts also advice that traders should focus on stock selection and prefer index majors.
 

Here are the key triggers for stock markets this week:
 

13 new IPOs, 2 listings to hit D-Street:

In the mainboard segment, SRM Contractors IPO will open for bidding on March 26. In the SME segment, Trust Fintech IPO, Vruddhi Engineering Works IPO, Blue Pebble IPO, Aspire & Innovative IPO, and GConnect Logitech IPO are opening for subscription on March 26. 

On March 27, Radiowalla IPO, TAC Infosec IPO, and Yash Optics & Lens IPO are opening for subscription on March 27. Jay Kailash Namkeen IPO, K2 Infragen IPO, Aluwind Architectural IPO, and Creative Graphics Solutions India IPO are opening for subscription on March 28.

Among listings, shares of Chatha Foods will debut on BSE SME on March 27. On March 28, shares of Omfurn India will get listed on NSE SME.

FII Activity:

Foreign institutional investors (FIIs) were net sellers in Indian markets last week and the net outflow stands at ₹83,65.53 crore, while domestic institutional investors (DIIs) were buyers for all sessions, with a total investment of ₹19,351.62 crore, according to stock exchange data.

Foreign portfolio investors (FPIs) continued their buying streak in March, turning steady buyers in Indian markets. Inflows rose in both debt and equities. The total debt investment stands at ₹13,223 crore so far this month.

FPIs have bought ₹38,098 crore worth of Indian equities and the total inflow stands at ₹51,542 crore as of March 22, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.

‘’The upcoming inclusion of Indian bonds in JP Morgan’s index has lead to a inflow in advance into the Indian debt markets. Further the expected global tapering in policy rates should make bond yields in emerging economies look even more attractive to investors making this trend of inflows into Indian debt more sustainable,” said Nitin Raheja, Executive Director, Julius Baer India. 

Global Cues:

Investors will be busy tracking the movement in US markets, bond markets and global macroeconomic data with the US GDP data and other key numbers are scheduled to be released in the next five days. The US Federal maintained its status quo on key interest rates last week but foresees three rate cuts in 2024.

Despite maintaining a forecast of lowering rates to 4.6 per cent by 2024, the latest “dot plot” indicates a shift in expectations, with fewer members anticipating multiple rate cuts this year. With signs of economic resilience and a willingness to tolerate temporary inflation fluctuations, the US central bank is fueling bullish sentiment in US markets, according to market experts.

‘’Policymakers intend to reduce interest rates three times this year, aligning with the quarterly forecasts from December…The US 10-year bond yield retreated from a nearly three-month high, reflecting increasing expectations of a reduction in the key benchmark rate,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

The S&P 500 ended near flat on Friday, but the index registered its biggest weekly percentage gain of 2024 after Jerome Powell-led Federal Open Market Committee (FOMC) stuck to its dovish stance and rate cut projections. The benchmark gauge notched its 20th record this year.

‘’Participants will continue to take cues from the global indices, especially the US markets, which are moving from strength to strength with every passing week. The major index, the Dow Jones Industrial Average (DJIA) is set to test a new milestone of “40,000″ and the support base has shifted to 39,200 in case of any profit taking,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Oil Prices:

International crude oil prices traded lower in the previous session and settled flat on the week as discussions of a ceasefire in Gaza led by US Secretary of State Antony Blinken and a stronger US dollar resulted in selling pressure. Blinken believed that discussions in Qatar could lead to an agreement between Israel and Hamas.

Additionally, a stronger dollar makes oil more expensive for investors holding other currencies, reducing the overall demand. The greenback traded higher to catch a second week of broad gains after the Swiss National Bank’s unexpected interest rate cut last week. 

Brent crude futures settled at $85.43, down 35 cents, while US crude settled at $80.63 a barrel, dropping 44 cents. Both oil benchmarks logged less a than one per cent change on the week, according to news agency Reuters. 

Corporate Action:

In the upcoming week, shares of several companies will trade ex-dividend and ex-split despite two market holidays. Shares of CRISIL Ltd, SBI Cards and Payment Services, REC, among others will trade ex-dividend in the coming week, starting from Tuesday, March 26. Persistent Systems will declare a stock split, among others. Check full list here

Technical View:

Technically, Nifty attempted to build support around 21,700. However, the immediate hurdle lies at the 20-DMA of 22,170, according to Santosh Meena, Head of Research, Swastika Investmart Ltd. A sustained break above this level could trigger short covering, pushing the index towards 22,300 and even 22,440.

‘’The recent rebound in the Nifty can be largely attributed to the favorable global cues however it is still facing a hurdle around the short term moving average i.e. 20 DEMA. We reiterate our cautious view on Nifty until it decisively reclaims the 22,200 zone otherwise profit taking may resume. On the downside, 21,500- 21,800 would continue to offer a cushion,” said Religare Brokings’ Ajit Mishra.

‘’Since we are seeing mixed trends across sectors, participants should focus on stock selection and risk management. We reiterate our preference for index majors & large midcaps and suggest utilizing rebound in the smallcap space to reduce positions,” added Mishra.

Bank Nifty held above its key 100-DMA, but faces an immediate challenge at the psychological level of 47,000, which also coincides with its 20-DMA. ‘’A break above this level could trigger short covering and a rally towards the 47,800-48,000 zone. The 46,400-46,000 zone acts as initial support. If the index falls below this, the next potential support lies at the 200-DMA around 45,400,” added Santosh Meena.
 

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 24 Mar 2024, 05:49 AM IST