Commenting on the day’s trade, Rupak De, Senior Technical Analyst at LKP Securities said that Nifty struggled to withstand the selling pressure at higher levels after beginning the day on a positive note and ultimately closing at the day’s lowest point. According to him, the overall sentiments remain positive and the index must surpass the 22,400 mark to trigger a new leg of rally. “A decisive breakthrough above 22,400 could propel the index towards 22,600. On the downside, support is situated at 22,250-22,200,” De said.
Factors that are likely to impact movement when markets reopen this week:
- US Markets
Handover from the US markets was strong with major headline indices on the Wall Street ending higher on Friday. While Dow 30 ended at 38,996.40, down by 47.37 or 0.12%, S&P 500 settled at 5,096.27, higher by 26.51 points or 0.52%. Meanwhile, Nasdaq Composite gained by over 144.18 points or 0.90% to end at 16,091.90 on Friday.
When Indian markets reopen on Monday, they will take cues from the Friday closing of the US markets. They will also track movement in GIFT Nifty futures on Monday. The latter is an early indicator of movement in the Nifty50.
- Rupee Vs Dollar
The Indian rupee ended little changed on Friday after rising to its highest level in a week as dollar demand from importers and a mild uptick in the dollar index eroded gains driven by inflows, Reuters reported quoting traders. The rupee closed at 82.90 after ending at 82.9125 on Thursday. The local unit notched a weekly gain of 0.04%, its third one on the trot.
The dollar index touched a high of 104.18 and was on course to notch a weekly gain of 0.1%. Most Asian currencies were range bound and ended the week mixed.
Inflows aided the rupee but were not enough to push it above the resistance at 82.80, a foreign exchange trader at a private bank said. But market sentiment appears broadly in favour of further appreciation, Reuters reported citing a trader.
“Next week will see more inflows which will be absorbed by RBI and keep the rupee in a tight range narrowly 82.85 to 82.95 and broadly 82.75 to 83.05. Exporters need to sell the good upticks while importers need to buy the dips for the very near term,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP said.
3) Corporate Action
A series of corporate actions are line-up this week. On Monday, EGM of Jyoti Structures and Steel Exchange India is scheduled; ex-date and record date for stock split of Capri Global is scheduled on Tuesday, March 6; ex date and record date for interim dividend of DCM Shriram on Tuesday; On March 7, ex date and record date interim dividend of Sanofi India and subdivision of Manorma Industries is scheduled.
4) Global Macros
US will announce S&P Global Composite PMI and Services PMI data for February while Fed Chair Jerome Powell will also testify before a Congressional panel this week.
HCOB Eurozone Composite PMI and Services PMI data for February month will be announced. The UK will also announce its S&P Global/CIPS UK Composite PMI (Feb) and S&P Global/CIPS UK Services PMI (Feb) data.
5) Technical Factors
Technically, Nifty’s primary trend remains positive, with the third consecutive weekly gain and despite Nifty IT underperforming as other sectors have demonstrated rotational participation, Om Mehra, Technical Analyst at SAMCO Securities said. The RSI is firmly at 61 indicating a balanced market, Mehra said, placing support at 22,100 while resistance at 22,550 followed by 22,700.
Meanwhile, mid and small-cap stocks have remained subdued, prompting caution against overexposure in them.
As for Bank Nifty, the MACD indicators maintained a neutral to positive stance and the Index is currently trading above the 20-day SMA, the SAMCO analyst said. He sees a critical resistance level at 47,800 for this week which if broken could initiate the next upside rally.
6) FII / DII Action
The foreign institutional investors (FIIs) were net buyers of Indian equities and purchased shares worth Rs 129 crore on Friday while the domestic institutional investors (DIIs) were net buyers at Rs 3,814.53 crore.
After being net sellers to the tune of Rs 25,744 crore in January, foreign institutional investors (FIIs) poured in Rs 1,539 crore last month despite the US bond yields ruling high with the 10-year yield at around 4.25%.
7) IPO Action
The primary market is all set for a busy month ahead with several new public offerings scheduled to debut on the Street. In the next week, as many as seven companies will launch their issues, including three of them in the mainboard segment. The mainboard IPOs of RK Swamy and JG Chemicals will hit the street this week along with three SMI IPOs viz. VR Infraspace, Sona Machinery and Shree Karni Fabcom.
8) Crude Oil
Oil prices traded sideways in the week gone by amid the Street’s expectations of a continuation of OPEC+ production cuts. A decision on extending the cuts is expected in the first week of March, Reuters reported quoting sources.
On the Comex, US WTI crude oil futures ended at $79.810 per BBL, up by $1.550 or 1.980% while Brent oil futures at $83.550, lower by $1.550 or 1.890%. As for MCX crude oil futures, the February contract ended at Rs 6,484, up by Rs 2 or 0.03%.
As for MCX crude oil futures, the March contract ended at Rs 6,637 on Friday, down by Rs 1 or 0.02%.
Oil prices are critical to Indian macros and also inflation and impact overall sentiments in the markets.
9) Bond Yields
Indian government bond yields ended the week steady as traders refrained from placing large bets amid a lack of fresh triggers. The benchmark 10-year yield ended at 7.0572% on Friday, after closing at 7.0764% in the previous session. The yield fell merely 2 basis points this week.
Bond yields, however, inched lower on Friday as market participants digested a sharp jump in the domestic economic print and latest data from the United States. India’s economy grew 8.4% in the October-December quarter, its fastest pace in one-and-a-half years, led by strong manufacturing and construction activity. The economy grew much faster than market estimates of 6.6% and also quickened from 7.6% in the previous three months.
Asia’s third-largest economy revised its growth estimate for the current fiscal year to 7.6% from 7.3%.
“The robust real GDP growth suggests that policy conditions will remain tight in the April policy and Reserve Bank of India (RBI) will likely shift its policy stance to ‘neutral’ in the June policy,” said Tanvee Gupta Jain, economist at UBS India.
In February, the central bank kept rates unchanged for a sixth consecutive time at 6.50% and reiterated its commitment to meet the 4% inflation target on a sustainable basis.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)