According to analysts, the market will continue to experience bouts of volatility, with the focus mostly on global cues such as the US financial crisis and the Federal Reserve policy meeting, given there are few domestic triggers.
The markets appear to be ruled by volatility next week.
The markets faced yet another week of disappointment, with benchmark indexes falling roughly 2% as a result of the financial crisis in the United States. Nevertheless, late-night purchasing on Friday helped it recover some of its losses following a rescue package for San Francisco-based First Republic Bank and financial assistance for Credit Suisse.
With the collapse of Silicon Valley Bank and the closure of New York’s Signature Bank, the American financial crisis continued to stalk markets throughout the world. Strong selling by foreign institutions sent the Indian markets farther downhill, notwithstanding a reduction in the US inflation data and decline in crude oil prices.
The BSE Sensex fell 1,145 points to 57,990, while the NSE Nifty fell 313 points to 17,100, extending losses for the second week in a row. The broader markets corrected in lockstep with the benchmarks as well. The Nifty Midcap 100 and Smallcap 100 fell 2% and 2.5 percent, respectively, as all sectoral indexes ended in the negative.
With the collapse of Silicon Valley Bank and the closure of New York’s Signature Bank, the American financial crisis continued to stalk markets throughout the world. Strong selling by foreign institutions sent the Indian markets farther downhill, notwithstanding a reduction in the US inflation data and decline in crude oil prices.
According to analysts, the market will continue to experience bouts of volatility, with the focus mostly on global cues such as the US financial crisis and the Federal Reserve policy meeting, given there are few domestic triggers.
“Consistently negative indicators in global markets are driving investors to safe havens like the dollar and gold, while FIIs are withdrawing funds from the local market in response to the weakening of the Indian rupee,” said Vinod Nair, Head of Research at Geojit Financial Services.
Given the European Central Bank’s (ECB) 50 basis point rate rise, all eyes will be on the US Federal Reserve and the Bank of England (BoE) policy meets next week, he added.
Let’s look at the 10 most important things that will keep traders active next week
Next week’s big event will be the US Federal Reserve policy meeting on March 21-22. Analysts believe the Fed will continue to raise interest rates despite inflation being over its 2 percent long-term objective, which fell to 6 percent in February from 6.4 percent in January. Core inflation also fell to 5.5 percent from 5.6 percent for the same time.
Previously, there were expectations for a 50 basis point increase in the fed funds rate due to strong US job data, a larger-than-expected drop in the number of Americans filing new unemployment claims last week, and elevated inflation, but with the current US banking crisis, the expectation has been reduced to 25 basis points for the March meeting, and the terminal rate may go higher than previously expected.
“With the majority of key economic data in hand ahead of the policy meeting next week,” said Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio.
The Bank of England is also slated to meet next week, on March 23, to decide on interest rates.
Market players will also keep a close eye on the situation in the US banking sector, particularly after Silicon Valley Bank declared bankruptcy and Signature Bank closed its doors.
First Republic Bank, situated in San Francisco, was the third to face similar problems but was spared by a $30 billion bailout from 11 big US banks, including JP Morgan Chase and Morgan Stanley, bringing up echoes of the 2008 global financial crisis.
Analysts believe the situation is not just confined to the United States, but also appears to be present in other countries of the world.
Credit Suisse also acquired a credit line of up to $54 billion from the Swiss National Bank in the last week to help with liquidity, although analysts are keeping a tight eye on it.
“It is too soon to declare the American financial crisis ended, but I am optimistic that it can be managed. Looking at European banks, I don’t believe it is limited to the US. During 2018, we had comparable conditions around the world, including in India “According to Arun Chulani, Co-Founder of First Water Capital Fund.
Here are some major global economic data items to keep an eye on next week:
Oil prices have also been stuck in a bear trap as a result of the financial sector crisis, registering the largest weekly decrease in the current calendar year. Any drop is always welcomed by oil-importing countries like India, but it must be properly monitored to see if the drop is sustainable, according to analysts who believe supply restrictions will continue to maintain prices.
Brent crude futures, the international oil benchmark, plunged over 12% to $72.97 per barrel, the lowest closing level since December 2021, while US oil prices sank 13.5 percent.
OPEC+ members blamed this week’s price decline on financial factors rather than a supply and demand mismatch, saying that the market will soon stabilise. Saudi Arabia and Russia reaffirmed their commitment to the OPEC+ deal in October to reduce production objectives by 2 million barrels per day through the end of 2023 in a meeting on Thursday. According to CNBC.
When the financial crisis impacted on equity markets, worldwide investors boosted their wagers on safe-haven assets, including gold. Comex gold April futures have risen over 7% in the last week.
5) Domestic Economic Indicators
Foreign exchange reserves statistics for the week ending March 17 will be issued on March 24.
Due to the revaluation of foreign currency assets, FX reserves fell by $2.39 billion in the previous week to $560.003 billion, the lowest level since early December 2022. Nonetheless, reserves climbed by $1.46 billion to $562.40 billion in the prior week ending March 3.
In addition, bank loan and deposit growth for the two weeks ending March 10 will be revealed on the same day.
Foreign institutional investors have withdrew funds from Indian equities markets in response to the worsening global climate caused by the current financial crisis, which is another element to keep an eye on.
For the week ended March 17, FIIs net sold roughly Rs 8,000 crore worth of shares, while domestic institutional investors offered significant support to the market, offsetting for all FII outflows by purchasing more than Rs 9,200 crore worth of shares.
Even in the current month, they have net acquired nearly Rs 16,000 crore worth of shares, which is more than Rs 6,400 crore more than FIIs have bought.
“If the financial uncertainty caused by the US SVB worsens, FIIs would become more cautious, which might have an impact on Indian equities markets. Other from that, we don’t see any major problems for equities markets “OmniScience Capital’s CEO and Chief Investment Strategist, Dr. Vikas Gupta, stated.
Next week, we will see an IPO from the Karnataka-based road building business Udayshivakumar Infra. The Rs 66-crore IPO will be up for registration on March 20 and will close on March 23.
The business has set the pricing range for its first public offering at Rs 33-35 per share. There is no offer for sale in the offer, simply a new issue section.
We will also have one listing next week. Global Surfaces, a developer of engineered quartz stone, will make its debut on the bourses on March 23 after finishing its public offering this week with 12.21 times subscription.
Experts told Marketbuddy that on the grey market, Udayshivakumar Infra traded at a Rs 10 premium to its issue price, while Global Surfaces traded at a Rs 10-15 premium to its estimated final issue price of Rs 140 per share.
For the second consecutive session, the Nifty50 created a Long Legged Doji pattern on the daily charts, but on the weekly timescale, a lengthy bearish candlestick pattern with a long lower shadow indicated support-based purchasing.
Given the recovery from five-month lows with back-to-back Doji with higher high higher lows formation on a daily scale, the market appears to have formed a temporary bottom; however, given the overall weakness on larger charts, the market will remain rangebound until we see a decisive closing above 18,000-18,100 area, with the broad trading range for the coming sessions expected to be 16,800-17,600, according to experts.
“Nifty might encounter challenges around the 17,250Of17,400 zone next week,” Ajit Mishra, VP – Technical Research at Religare Broking, said.
Ajit encouraged traders to continue with a stock-specific approach, with an emphasis on overnight risk management, because there is a mixed trend across sectors.
On the option front, we’ve seen greatest Call open interest at the 18,000 strike, followed by the 17,500 and 17,600 strikes, with Call writing at the 17,500 and 17,100 strikes.
According to Put side statistics, the largest open interest was seen at the 17,000 strike, followed by the 16,500 strike, with writing at the 17,100 strike, followed by the 16,500 strike.
According to option data, the larger trading range for the Nifty50 might be 16,600-17,600 levels, while the next week could be in the area of 16,800-17,400 levels, according to analysts.
After hanging above 16 levels for three days, the India VIX, or fear index, fell by 9% to settle at 14.76 levels on Friday, but for the week, it maintained an uptrend for the second week in a row, rising by 10%. As a result, analysts believe the bulls may remain uneasy till it returns to around 12 levels.
10) Corporate Action
The following are the major corporate activities scheduled for the coming week:
The following stocks will go ex-dividend next week: Hindustan Aeronautics, Ujjivan Financial Services, GAIL India, SAIL, NALCO, Sun TV Network, Aditya Birla Sun Life AMC, and Glenmark Life Sciences.
