Week Ahead: Inflation data, FII activity, global cues among key market triggers as Nifty 50 eyes 22,800 this week

The domestic equity benchmarks witnessed a volatile week but extended their winning streak for a fourth consecutive week to hit new all-time highs –the best such streak in three months. The frontline indices Sensex and Nifty 50 hit fresh record highs in the previous session at 22,525.65 and 74,245.17 respectively and also gained about three per cent each in four weeks.

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The NSE Nifty 50 settled the week at 22,493.55, while Sensex ended the week at 74,119.39. Most sectors traded in green with maximum gains in Banks, Metals and Energy, while, Media, IT and healthcare ended the week in red. Bank Nifty outperformed this week and is poised to reach fresh highs. 

According to Santosh Meena, Head of Research, Swastika Investmart Ltd, the regulatory concerns regarding excessive enthusiasm and profit booking in the midcap and smallcap space, coupled with recent actions on certain NBFCs and city gas distributors, dampened investor sentiment last week.

The domestically-focussed small-caps dropped 2.18 per cent, while the broader mid-caps added 0.36 per cent– both underperforming the blue-chip indexes on concerns over excessive fund inflows and stretched valuations.

Vinod Nair, Head of Research, Geojit Financial Services said, ‘’Amidst mixed signals from the global market, the domestic market exhibited a range bound movement but concluded on a positive note. Expectations of a rate cut from the Fed and declining bond yields prompted rational investors to shift towards equities, bolstering the market.”

Also Read: Over 30 smallcaps log double-digit as Sensex posts fourth straight weekly gain; Tata Group stocks among gainers

An improved macroeconomic narrative favoured banking stocks, while uncertainties in the global market led to weakness in the IT sector. Faster-than-expected economic growth for the current fiscal drove sentiments for metal and capital goods stocks, resulting in a rally in the respective sector indices. 

Small and mid-cap stocks underwent corrections leading to increased demand for large-cap stocks, according to Nair. The analyst expects volatility to persist in the upcoming week due to high valuations and forthcoming policy rate guidance releases.

In the coming week, some new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments which will keep primary markets buzzing.

Overall, analysts expect markets to sustain its trend with rotational buying despite volatility, but also foresee Nifty 50 to inch towards the 22,750-22,800 zone with the ongoing rally focused towards large caps. Experts also advice that traders should continue with stock-specific approach.
 

Here are the key triggers for stock markets this week:
 

Domestic Macroeconomic Data:

Investors will keenly eye macroeconomic data this week as India’s consumer price index (CPI)-based inflation or retail inflation rate for February and the index of industrial production (IIP) data for January are scheduled for release on March 12, followed by the wholesale price index (WPI)-based inflation on March 14. 

7 new IPOs, 5 listings to hit D-Street:

In the mainboard segment, Popular Vehicles & Services IPO and Krystal Integrated Services IPO will open for subscription on March 12 and 14. Among the ongoing issues, Gopal Snacks IPO will close for bidding on March 11.

In the SME segment, Pratham EPC Projects IPO will open for subscription on March 11. Signoria Creation IPO and Royal Sense IPO will open for bidding on March 12. AVP Infracon IPO opens on March 13 and KP Green Engineering IPO will open on March 15.

Among listings, shares of Bharat Highways InvIT and RK Swamy will debut on stock exchanges BSE, NSE on March 12, while shares of JG Chemicals will get listed on March 13 and Gopal Snacks will debut on BSE, NSE on March 14.

Additionally, shares of V R Infraspace will debut on NSE SME on March 12 and Sona Machinery will get listed on the same platform on March 13. On March 14, shares of Shree Karni Fabcom will debut on NSE SME and Koura Fine Diamond Jewelry shares will get listed on BSE SME. On March 15, shares of Pune E-Stock Broking will debut on BSE SME.

FII Activity:

Foreign institutional investors (FIIs) have shown a renewed interest in Indian markets as they were buyers for three out of four sessions last week with a net investment value of ₹10,081.08 crore. Continuous inflows by the domestic institutional investors (DIIs) continued as they emerged buyers for all sessions last week, with a total investment of ₹10,129.17 crore, according to stock exchange data.

‘’FIIs have sold around $2.4 billion of Indian shares so far despite India’s strong corporate earnings and robust macroeconomic numbers. The major concern for FII’s could be valuations as the prices of shares have run up way ahead of fundamentals. Other factors could be the US 10-year bond yield, no US Fed rate cut expectations,” said Arvinder Singh Nanda, Senior vice president at Master Capital Services Ltd.

The sectors where FIIs are cautious are Financial Services, telecom and construction. The sectors where FIIs have a bullish outlook are Healthcare, Consumer services, It and automobile. The FII trend reversal might depend on global economic conditions, sustained growth in India, US Fed policy clarity and robust domestic flow might attract foreign investment in India, according to Nanda.

Foreign portfolio investors (FPIs) extended their buying streak and pumped ₹11,823 crore worth of Indian equities so far in March. The total FPI inflow stands at ₹15,559 crore as of March 7, taking into account debt, hybrid, debt-VRR, and equities. 

FPIs invested ₹3,316 crore in debt markets so far this month after inflows rose to ₹22,419 crore in February on top of the ₹19,836 crore bought in January. Experts say that the resilience of Indian stock markets, better-than-expected economic growth. inclusion of government bonds to JPMorgan and Bloomberg debt indices have triggered massive foreign fund inflows into debt markets.

Global Cues:

This week’s market focus shifts to inflation data releases. The US will unveil its inflation figures on Tuesday and the Producer Price Index (PPI) data on Thursday. Among other major economic data that investors will focus on are Japan and UK GDP, UK unemployment rate. Investors will also take cues from the outcome of the ECB interest rate meeting and the US Non-Farm Payroll which were released on Friday.

‘’The performance of the global indices would continue to offer cues over market direction. Currently, the US markets are seeing some profit taking, after a steady uptrend for four months. And, that might result in intermediate volatility in our markets too, especially at the open,” said Ajit Mishra, SVP- Technical Research, Religare Broking Ltd.

Oil Prices:

International crude oil prices declined by one per cent and posted a weekly loss last week even after supply cut extension announced by the Organisation of Petroleum Exporting Countries (OPEC) couldn’t prop up prices. Oil markets also weighed the softer Chinese demand as imports of crude oil in the first two months of 2024 came lesser than the preceding months.

According to news agency Reuters, Brent crude futures settled down 1.1 per cent, at $82.08 per barrel, while the US West Texas Intermediate crude futures (WTI) declined 1.2 per cent, at $78.01. The oil benchmarks were down 1.8 per cent and WTI 2.5 per cent on the week, respectively, according to Reuters.

The OPEC cartel extended the voluntary oil output cuts of 2.2 million barrels per day into the second quarter, in an effort towards market stability and prices, amid concerns over global growth and rising output levels.
 

Corporate Action:

In the coming week, shares of some companies, including SBI Life Insurance, Wonder Electricals, IIFL Securities, and others will trade ex-dividend, starting from March 11. A few stocks will also trade ex-split and ex-bonus in the coming week. Check full list here

Technical View:

Technical indicators point towards continued bullish momentum for the Nifty. The recent breakout from the ascending triangle pattern suggests an immediate target of 22,800 next week, with 22,500 acting as a psychological hurdle, according to Swastika Investmarts’ Santosh Meena.

Ajit Mishra, SVP- Technical Research, Religare Broking Ltd agreed. ‘’Markets have been gradually inching higher with every passing week, thanks to rotational buying across the key sectors however we are seeing selective participation now.”

‘’Having said that, we expect Nifty to maintain the prevailing tone and gradually inch toward 22,800. On the downside, the 21,900-22,150 zone would offer a cushion in case of any profit taking. Traders should maintain stock-specific trading approach and prefer index majors and large midcaps for long trades,” added Mishra.

Rupak De, Senior Technical Analyst, LKP Securities added that the buy-on-dips strategy is likely to persist as long as it remains above 22,400. On the upside, a decisive move above 22,500 could trigger buying interest in the market, potentially pushing the index towards 22,700 in the short term, suggested De.

Bank Nifty’s weekly closure indicates a resilient bullish momentum, with pivotal support identified at 47,500 and resistance at 48,200. A conclusive breach above the 48,200 threshold, confirmed by a closing basis, could catalyze a bullish upswing towards levels of 48,500 and 48,800, according to Rupak De.

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: 10 Mar 2024, 05:55 AM IST