The domestic equity benchmarks broke a four-week rally and recorded the worst week since October 2023 with Nifty and Sensex down 2.09 percent and 1.99 percent dragged by broader indices. The move was subdued in the following sessions, tracking mixed cues. Indices rebounded in the final sessions from its intraday lows. The Nifty 50 held steady at 22,000, supported by Bharti and Bajaj Finance.
Read also: Bears tighten grip on D-Street: Nifty 50, Sensex register worst session in 2 months; small, mid caps are worst in 2 years
Small caps and midcaps recorded their worst week in 15 months, witnessing a sharp decline in the range of 4.7 percent-5.5 percent after capital markets regulator Securities and Exchange Board of India (SEBI) raised concerns about strained valuations. Experts have also flagged concerns about markets in a bubble zone.
Finally, both Nifty and Sensex, closed near the low of the week at 22,023.35 and 72,643.40 levels. All key sectors, except IT, ended in the red, with real estate, metals and energy among the top losers. The stress test results of mutual funds indicated a disparity in the length of time funds would take to liquidate their portfolios.
“After touching a new high, the domestic market witnessed a correction due to concerns about the broader market valuation and an increase in volatility. The adverse risk-reward balance of mid- and small-cap stocks, fueled by prolonged premium valuations, exacerbated the balance. fall,’ ‘ said Vinod Nair, Head of Research, Geojit Financial Services.
”We expect business opportunities to persist in mid- and small-cap stocks whose valuations are supported by fundamentals. Meanwhile, FMCG and contrarian plays like gold offer some refuge,” Nair added.
Read also: Oil market overextended with record US production, Brent seen at $87-$92 for 2024: ShareKhan’s Mohammed Imran
The coming week will witness a buzzing primary market with some new initial public offerings (IPOs) especially in the small and medium enterprises (SME) segment and listings are planned across both the main board and SME segments.
Overall, analysts expect markets to be volatile this week with Nifty 50’s likely to slide further to 21,500. However, if the index holds above 22,500, then there are chances of an upward move. Experts also advise that traders should prefer index majors and refrain from loss-making positions in broader markets.
Here are the key triggers for stock markets this week:
Results of the US Fed Policy, BoE, BoJ meeting:
Next week will put a significant focus on monetary policy decisions by central banks, as the US Federal Reserve will begin its two-day policy meeting on March 19. The US Fed will announce its interest rate decision after its two-day policy meeting on March 20, 2024. According to reports, the US Federal Reserve will leave its reference overnight interest rate unchanged.
The Bank of Japan (BoJ) will announce its interest rate decision on March 19, while the Bank of England (BoE) is likely to announce its policy decision on March 21, 2024.
3 new IPOs, 8 listings to hit D-Street:
In the mainboard segment, no new topics are listed to open for subscription so far. Among the ongoing issues, Krystal Integrated Services IPO will close for bidding on March 18.
In the SME segment, Chatha Foods IPO will open for subscription on March 19. Omfurn India FPO will open on March 20 and Vishwas Agri Seeds IPO will open on March 21.
Among listings, shares of Popular Vehicles & Services will list on BSE and NSE stock exchanges on March 19. Additionally, shares of Pratham EPC Projects will be listed on NSE SME on March 18. March 19, shares of Signoria Creation and Royal Sense. will be listed on NSE SME and BSE SME respectively.
On March 20, AVP Infracon shares will be listed on NSE SME. On March 22, shares of KP Green Engineering will be listed on BSE SME, while Enfuse Solutions and Enser Communications will be listed on NSE SME. According to analysts, the IPO momentum is expected to continue this year with bigger deals.
”The factors that are likely to keep IPO market robust in 2024 could be increase in domestic capital, improvement in governance, flourishing entrepreneurship, favorable government policies with FDI support, dedicated institutional investors,” said Arvinder Singh Nanda, Senior Vice President , by Master Capital Services Ltd.
FII Activity:
Foreign institutional investors (FIIs) turned net sellers on high US bond yields as well as weaker domestic markets. On the other hand, domestic institutional investors (DIIs) were net buyers during four out of five sessions last week.
Although FIIs were buyers for three out of four sessions this week, but the net outflow stands ₹816.91 crore, while DII were buyers for all sessions, with a total investment of ₹14,147.5 crore, according to stock market data.
Foreign portfolio investors (FPIs) continued their buying streak in the second week of March, extending the modest streak gathered in April by turning steady buyers in Indian markets. Market experts highlighted that FPIs have also invested in some wholesale deals across the stock exchanges this month.
According to National Securities Depository Ltd (NSDL) data, FPIs bought ₹40, 710 crore of Indian shares and the total inflow stands ₹50,471 crore as on March 15, taking into account debt, hybrid, debt-VRR and equity.
Global Directions:
In the coming week, markets will react to important macroeconomic data from major countries including S&P Global Manufacturing and services PMI from the UK and US. Important indicators will also emerge from China such as industrial production, unemployment rates, along with Eurozone inflation, trade balance, UK and Japan inflation data, and the aforementioned central bank policy decisions.
China will announce the main lending rate for 1-year and 5-year loans on March 20. Other cues such as crude oil inventories, movement of the rupee against the dollar and US bond yields will also guide market direction this week.
”In the coming week, participants will continue to take cues from the global markets, without any major event on the home front. The main index, the Dow Jones Industrial Average (DJIA) is hovering in a narrow range ie 38,500-39,300 before the FOMC meeting and a decisive break on either side would dictate the near-term trend,” said Ajit Mishra, SVP – Technical. Research, Religare Broking Ltd.
Oil Prices:
Crude oil markets were on fire last week with international oil futures hitting a record five-month high of $85 a barrel after the International Energy Agency (IEA) raised its demand forecast for 2024, predicting a tighter market. Ukraine’s drone attack on Russia’s oil refinery also supported the upward trend in prices, as the ongoing conflict caused fresh supply disruptions.
Oil gained three percent last week with benchmark Brent crude settling near $83 a barrel, after rising 4.3 percent over the previous two sessions and hitting its highest level since November on Thursday. Also, US West Texas Intermediate (WTI) crude was down 17 cents or 0.21 percent to $81.09.
According to Mohammed Imran, Research Analyst at BNP Paribas’ domestic brokerage firm ShareKhan, Brent crude may average between $87-$92 by 2024. He added that oil markets are oversupplied, resulting in weaker prices, as US oil production is more than any other a nation . Read full interview here
Corporate Activity:
Shares of several state-owned majors such as Oil India, Bharat Electronics Ltd (BEL), and Power Finance Corporation (PFC) will trade ex-dividend next week, along with some private companies such as TVS Motor Company, Patanjali Foods, Castrol. India, and others. Several stocks such as Tine Agro Ltd and Colab Cloud Platforms Ltd will also trade ex-bonus and ex-dividend. Check full list here
Technical View:
Indications are in favor of further slippage in the Nifty index, after the breach of double support viz. short term moving average ie 20 DEMA and rising trend on the daily chart, according to analysts.
”A breakdown below the previous swing low ie 21,850 could result in the next stage of a downward move to 21,500. The view would be negated if it manages to cross and hold decisively above the 22,250 level,” said Ajit Mishra of Religare Brokings.
Among the key sectors, IT and FMCG look relatively stronger while others may continue to trade mixed. ”Amidst all, we reiterate our preference for index majors and suggest maintaining positions on both sides. Furthermore, we advise traders to refrain from adding to the losing positions, especially in the mid-cap and small-cap space and wait for some sign of a reversal,” Mishra added.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd noted that Nifty 50 has formed a bear-swallowing candlestick formation in the weekly time frame. However, it is trying to protect its 50-DMA on the daily chart.
”On the upside, 20-DMA of 22,220 is immediate and strong resistance. Above 20-DMA, we can expect a short covering move to 22,440/22,525 levels.,” he added.
Bank Nifty is trading near the 46,300-46,000 demand zone, which coincides with the 100-DMA. ” On the upside, 47,000–47,400 is a strong resistance zone; above this, we can expect a sharp move to the 48,000-48,300 zone. 200-DMA of 45,300 will be key support for further weakness,” said Gour.
Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities added that a decisive breakout could propel the index higher towards the 47,500 mark. ”On the flip side, the lower end support is positioned at 46,500-46,300, where bulls are currently trying to defend. However, a break below this level may intensify selling pressure in the market,” said Shah.
Disclaimer: The views and recommendations above are those of individual analysts, experts and second-hand companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 17 Mar 2024, 06:03 IST