Fed meeting, foreign fund flows among factors that can influence markets this week

For fresh cues, market participants will keenly watch out for next week’s US Federal Reserve monetary policy outcome and foward-looking guidance. Apart from this, the Japanese inflation rate for February will be announced on 24 March, 2023.

The next US monetary policy meeting is scheduled for 21-22 March. The US Fed is expected to approve a quarter-percentage-point interest rate increase next week even with turmoil in the banking industry and uncertainty ahead, according to market experts.

“In absence of any major domestic event, the focus would be on the upcoming FOMC meet scheduled on March 21-22. Besides, movement in crude and trend of foreign flows will also be in focus for cues,” said Ajit Mishra, VP – Technical Research, Religare Broking Ltd.

“Markets may take a breather initially however the upside also seems capped. Nifty could face hurdles around the 17,250-17,400 zone while the 16,600-16,800 zone would provide the needed cushion, in case the situation deteriorates further,” Mishra said.

Since we’re witnessing a mixed trend across sectors, Mishra said that traders should continue with stock-specific approach, with a focus on overnight risk management.

OMCs to be in focus

Metal stocks could see some momentum after China’s central bank cuts CRR by 25 basis points in an effort to stimulate its economy. Realty stocks are seeing buying interest post DLF announcement of record sales growth. With oil hovering at 15-month low, cement, paints and OMCs would also be in focus.

“Going ahead we expect a short term pullback in the market as lower US PPI inflation and slower US retail sales data has led to the hope of lower 25 bps rate hike in the Fed policy meet next week. However the market structure is still weak and hence traders should take a cautious stance at higher levels,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Tech view

After showing high volatility at the swing low of 16850 levels on Thursday, Nifty showed a sustainable upmove with volatility on Friday and closed the day higher by 114 points, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

A small body of negative candle was formed on the daily chart with long lower shadow. Technically, this pattern, Shetti said, indicates a formation of long legged doji type candle pattern (not a classical one). “Hence, we observe back to back doji pattern in the last two sessions. The current market action suggests that market is in the process of near term bottom formation,” he said.

“Nifty on the weekly chart has formed a long bear candle with lower shadow. The negative chart pattern like lower tops and bottoms is intact on the daily chart and the swing low of Thursday at 16850 could be considered as a new lower bottom of the sequence. One may expect Nifty to move up from here towards the next overhead resistance of 17300-17350 levels by next week. Immediate support is at 16950 levels,” Shetti said.