In the passing week, Indian equity markets ended with hefty losses as higher US inflation numbers dented investors’ sentiments of rate cut hopes. The Key benchmarks declined nearly 2% this week.
In the passing week, Indian equity markets ended with hefty losses as higher US inflation numbers dented investors’ sentiments of rate cut hopes. Besides a weak reading of Index of Industrial Production (IIP) data also dampened the market sentiments. Growth in factory output, based on the IIP, slowed to 3.8% in January 2024, mainly due to poor performance of manufacturing, mining, and power sectors.
These signals led the BSE Sensex to decline 1476 points, or 1.99%, at 72,643.43 during the week ended on March 15, 2024. While the Nifty slipped 470 points, or 2.09%, to 22,023.35.
Sector-wise, only the BSE Teck index (up 0.8%) and BSE Information Technology index (up 0.5%) ended in the green during the week gone by. On the other hand, BSE Realty index registered a fall of 9.3% followed by BSE Metal (tanked 7.7%) and BSE Power index (declined 6.7%) are the biggest sectoral losers.
Only 13 stocks in the Nifty 50 index delivered a positive return for investors in the last week. With a weekly gain of 2.6%, Tata Consultancy Services emerged as the top gainer in the index. It was followed by Nestle India (1.9%), Britannia Industries (1.8%), Bharti Airtel (1.8%), and HDFC Life Insurance Company (1.7%). ITC, Bajaj Finance, Shree Cement, and Infosys also advanced by over one percent.
On the other hand, NTPC, Tata Steel, and Coal India declined 10.2%, 10%, and 9.5%, respectively.
Market Macros: Vinod Nair, Head of Research at Geojit Financial Services says, after touching a new high, the domestic market witnessed a correction due to concerns over the broader market valuation and increase in volatility. The unfavourable risk-reward balance of mid- and small-cap stocks, fuelled by prolonged premium valuations, has aggravated the downfall. Mid and small caps corrected led by selling from leverage-based retail investors.
Nair added that We expect bargain opportunities to persist in mid- and small-cap stocks whose valuations are supported by fundamentals. Meanwhile, FMCG and contrarian plays like gold are offering some refuge.
The week ahead, the global central bank’s monetary policy decision will get investors’ attention. The US FED, BOJ, and BOE will unveil their rate decisions. “There is uncertainty over FED rate cuts due to an increase in the US unemployment rate and higher than expected US inflation. Consequently, the US 10-year yield and dollar index inched higher, and the repercussions were visible in the emerging markets as well” Nair said.
Nifty outlook: According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, after showing a sustainable upside bounce on Thursday, Nifty rebounded down on Friday and closed the day lower by 123 points. A small negative candle was formed on the daily chart, that was placed at the edge of moving below the immediate support of 21900 levels. The downside breakout of the daily 10/20 period EMA and ascending trend line is still intact and the market is finding resistance at the previous breakout area around 22150-22200 levels, as per change in polarity.
Shetti added that the Nifty on the weekly chart formed a long bear candle, which indicates the formation of a bearish engulfing type candle pattern. Nifty as per the weekly chart placed at the edge of moving below the strong support of the 20-week EMA around 21915 levels. This is not a good sign.
“The short-term and the near-term trend of Nifty remains weak. A decisive move below 21900 could open sharp weakness down to the next lower support of 21500 levels in the near term. Immediate resistance is at 22200 levels,” Shetti said.
