"While global cues could act as the major trigger for domestic equities in the near-term, the Nifty 50 is likely to remain resilient due to reasonable valuations and India's macro stability," said Narendra Solanki, head of equity research at Anand Rathi Shares and Stock Brokers.
Here’s breaking down the factors that will drive markets in the week ahead:
Monthly F&O expiry
Markets may remain volatile close to the scheduled monthly expiry of February monthly derivatives contracts. Investors are advised to focus on overnight risk management and prefer quality picks.
RBI MPC minutes
The Reserve Bank of India will release minutes of the latest policy meeting and investors will keep a close eye on the commentary to get a sense of the policy direction. The Central bank hiked the key repo rate by 25 basis points, but surprised markets by leaving the door open to more tightening, saying core inflation remained high.
VIX (Volatility index)
The volatility index, which is a measure of the fear in the markets, swung up and down throughout the week and settled at 13.08 levels.
Technical factors
This week, Nifty attempted to close above its big Budget Day high, but profit booking stepped in towards the last day of the week and forced the index to close below its psychological 18000 mark. "Technically the structure is still bullish and Nifty stands at the strong polarity support, failing to hold which, the index is likely to see a further correction towards 17650-17500 zones. Only a sustained close above the 18200-18250 zone is likely to trigger bullish momentum toward 18450-18500 levels," said Rohan Patil, Technical Analyst, SAMCO Securities.
FII/DII flows
After being net sellers for most of the year, foreign investors have turned net buyers for the last week. "An important recent trend is that FPI selling has reduced significantly and FPIs have even turned buyers in some recent days. It appears that the sustained selling in India witnessed from early January is over, but they might sell again at higher levels," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Global cues
As mentioned above, due to lack of fresh triggers in the domestic market, global sentiments around the monetary tightening and other news flows will impact the benchmarks. "There is a clear pattern to the trends from the mother market, US. Whenever positive news like declining inflation comes, equity markets rise on hopes of a Fed pause and a possible rate cut by end 2023. Conversely, whenever data indicates a robust US economy, tight labour market and very slow disinflation, equity markets fall expecting the Fed to remain hawkish," said V K Vijaykumar of Geojit Financial Services.
Index rejig impact
Leading stock exchange NSE has tweaked the constituents of its major indices with Adani Group's two companies -- Adani Wilmar and Adani Power -- all set to make their way into some of the Nifty indices from March 31, 2023. Adani Wilmar will be part of Nifty Next 50 and Nifty 100 indices, while Adani Power will be included in Nifty 500, Nifty 200, Nifty Midcap 100, Nifty Midcap 150, Nifty LargeMidcap 250, and Nifty Mid Small Cap 400 indices. All the changes in the indices will be effective from March 31 this year.
Global markets
Stock markets dropped around the globe on Friday and Treasury yields climbed while the dollar hit a six-week high after US economic data prompted bets that the Federal Reserve would raise rates more than expected and keep them higher for longer to battle stubborn inflation. The Dow Jones Industrial Average fell 0.21, the S&P 500 lost 0.89% and the Nasdaq Composite dropped 1.33%. The pan-European STOXX 600 index lost 0.23% and MSCI's gauge of stocks across the globe shed 0.81%. Emerging market stocks lost 1.10%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Global cues, monthly F&O expiry among 8 factors that will drive markets this week - Economic Times
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