Macro data, FII mood, global cues to guide markets as Nifty 50 eyes 22,600
The Indian equity indices witnessed a volatile week, ultimately extending their winning streak for a third consecutive week to achieve a new all-time high. The Nifty and Bank Nifty indices rose by nearly 0.75 per cent and 11.5 per cent respectively, closing the week at 22,419.55 and 48,636.45. The market capitalisation of BSE-listed companies reached its all-time peak of ₹394.06 lakh crore.
Initially, the Nifty prices dropped to as low as 21,860.65, the lowest level since February 15. However, bargain hunting emerged from these lower levels, driven by several positive fundamental factors. These include India’s gross domestic product (GDP) growth for the third quarter of the fiscal year 2023-24, which exceeded expectations at 8.4 per cent compared to the estimated 6.7 per cent.
On the sectoral front, all sectoral indices ended higher except Media, Pharma and IT. Additionally, the backdrop of an improving global market and a respite in the US personal consumption expenditures (PCE) inflation reading provided further support to the market.
Nifty 50 and Sensex ended higher in a special session conducted on March 2, for stock exchanges to test a failsafe system for equity trading. The 30-share BSE Sensex climbed 60.80 points or 0.08 per cent to reach its all-time closing high of 73,806.15. During the trade, the BSE benchmark reached its record peak of 73,994.70, up 249.35 points or 0.33 per cent.
The Nifty 50 went up by 39.65 points or 0.18 per cent to settle at a new closing high of 22,378.40. During the day, it hit the lifetime peak of 22,419.55, up 80.8 points or 0.36 per cent. The blue-chips indexes logged new record highs on the back of gains in metal stocks, extending their previous day’s sharp rally amid GDP data and foreign fund inflows.
Market analysts noted that banking stocks reversed initial weakness to perform well on the back of an improved economic outlook, while weakness persisted in the IT and pharma sectors, which are more closely tied to the global economy.
“At the onset of a week laden with economic data releases, investor sentiment appeared cautious. However, indices surged in the final session, propelled by stellar GDP figures and a healthy performance in the manufacturing sector as output and new order picks up,” said Vinod Nair, Head of Research, Geojit Financial Services.
‘’While robust economic data boosted confidence in the economy, concerns lingered regarding the RBI’s policy decisions amidst high liquidity and inflation worries. Corrections in mid- and small caps are underway and expected to continue, with regulators urging disclosure of associated risks to AMCs,” added Nair.
Going forward, a busy week awaits the primary market as several new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The upcoming week will be crucial from the domestic and technical point of view as investors will closely eye the stock action along with domestic and global cues.
Overall, analysts say that the sentiment remains positive, however, volatility cannot be ruled out due to ongoing concerns like delay in rate cuts, Middle East conflict and expensive valuations of local stocks. Going ahead, Nifty 50 must surpass the 22,400 mark to trigger a new rally and propel towards 22,600. Experts advice investors to continue with the “buy on dips” strategy and focus on stock selection until Nifty 50 breaks 21,900.
Here are the key triggers for stock markets in the coming week:
Macro Data:
In the coming week, market will react to domestic macroeconomic data such as trade balance, India’s S&P Global Services PMI, and forex reserves. Political developments will be keenly eyed by investors ahead of General Elections to anticipate a pre-election rally.
8 new IPOs, 7 listings to hit D-Street:
In the mainboard segment, RK Swamy IPO, JG Chemicals IPO, and Gopal Namkeen IPO will open for subscription on March 4, 5, and 6 respectively. Among the ongoing issues, Mukka Proteins IPO will close for bidding on March 4.
In the SME segment, V R Infraspace IPO and Sona Machinery IPO will open for subscription on March 4 and 5 respectively. Shree Karni Fabcom IPO and Koura Fine Diamond Jewelry IPO will open for bidding on March 6. Pune E-Stock Broking IPO will open for subscription on March 7. Among the ongoing issues, M.V.K. Agro Food IPO will close for bidding on March 4.
Among listings, shares of Platinum Industries and Exicom Tele-Systems will debut on stock exchanges BSE and NSE on March 5. Shares of Bharat Highways InvIT will list on March 6 and shares of Mukka Proteins will debut on March 7.
Additionally, shares of Owais Metal and Mineral Processing and shares of Purv Flexipack will get listed on March 4 and 5 on NSE SME. Shares of M.V.K. Agro Food will debut on March 7 on NSE SME.
FII Activity:
Foreign institutional investors (FIIs) were net buyers in Indian markets as outflows reduced significantly this week amid strong market sentiments with domestic equity benchmark Nifty 50 touching record highs buoyed by robust macroeconomic indicators. Domestic institutional investors (DIIs) were net buyers and continues domestic inflows counterbalanced any of the outflows by foreign investors.
Even though FIIs were buyers for three out of five sessions this week, yet the net investment value stands at ₹23.51 crore. while DIIs were buyers for three out of five sessions, with a total investment of ₹8,268 crore, according to stock exchange data. On a monthly basis, FIIs have infused over ₹870 crore in cash markets despite high US bond yields.
Foreign portfolio investors (FPIs) snapped January’s selling streak in Indian markets, and turned net buyers in February despite high US bond yields. However, the capital outflow from Indian equities by FPIs stands at ₹20,004 crore so far in 2024.
FPIs have bought ₹1,539 crore worth of Indian equities and the total inflow stands at ₹31,817 crore as of February 29, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. On March 1, FPIs again infused ₹4,201 crore in Indian equities but offloaded ₹134 crore from debt markets.
FPIs were big sellers in financials and FMCG in February. FPIs outflow initially declined in February until they were net buyers by the end of the month, despite high US bond yields. Market experts say that normally when the US 10-year yield rises above 4.15 per cent, the FPIs sell heavily.
Market analysts say that FPIs may again turn sellers in some of the coming days. But they are unlikely to sell aggressively because their selling is not having any impact on the market which is setting new record highs.
Global Cues:
Global markets have been upbeat, with the Nasdaq rising by two per cent, the S&P 500 by 0.95 per cent, and the Dow Jones remaining relatively flat throughout February 2024. Moreover, US 10-year bond yields and the dollar index have moderated, providing further support to market sentiment. In the coming week, market will react to global economic data, crude oil inventories, movement of rupee against dollar, and trends in global stock market.
‘’Some major economic data which could impact the market are China’s Caixin Services PMI, inflation numbers, UK S&P Global/CIPS Services PMI and Construction PMI, US S&P Global Services PMI, API weekly crude oil stock, ADP nonfarm employment change, initial jobless claims, and unemployment rate,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services.
Geojit’s Vinod Nair said that the release of additional data from the US, such as PMI and payroll data, along with inflation data from China, may influence market dynamics moving forward.
‘’Release of the US ISM services PMI on March 5, 2024, testimony by US Fed Chair Powell, and the announcement of JOLTS job openings on March 6, 2024, along with the US unemployment rate on March 8, 2024, will be closely watched for their potential impact on market sentiment,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
‘’Crude oil is also inching higher, and any negative surprise from there can disturb the mood of the market. However, the market is ignoring any bad news and continuing its bullish momentum,” added Meena.
Oil Prices:
Oil prices rose two per cent in the previous session and posted weekly gains as traders awaited the supply agreements decision for the second quarter by the Organisation of Petroleum Exporting Countries and it allies (OPEC+) while also weighing fresh US, European and Chinese economic data.
Brent futures for May settled $1.64 higher, or two per cent, at $83.55 a barrel. The April Brent futures contract expired on February 29 at $83.62 a barrel. US West Texas Intermediate (WTI) for April rose $1.71, or 2.19 per cent, to $79.97 a barrel.
For the week, Brent added around 2.4 per cent following the switch in contract months, while WTI gained more than 4.5 per cent, according to news agency Reuters. Analysts said that the expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024.
Corporate Action:
Shares of several companies, including Marico Ltd, Panchsheel Organics, Sanofi India, among others will others will trade ex-dividend in the coming week, starting from Monday, March 4. Some other companies will also trade ex-bonus and ex-split in the coming week. Check full list here
Technical View:
Ajit Mishra, SVP – Technical Research, Religare Broking is eyeing 22,800 in Nifty now, thus participants should continue with a ‘buy on dips’ approach until it breaks 21,900.
‘’We feel the participation of the banking pack would continue to play a critical role in maintaining the prevailing momentum while others may play a supportive part on a rotational basis. Traders should maintain stock-specific approach and prefer index majors and large midcap counters for long trades,” added Mishra.
‘’The Nifty is resuming its bullish momentum after a period of two months of consolidation. 22,500 is an immediate target level, while 22,750 is the next target level. On the downside, 22,200–22,000 will now act as a strong demand zone,” said Swastika Investmarts’ Santosh Meena.
Rupak De, Senior Technical Analyst, LKP Securities added, ‘’Although the overall sentiment remains positive, the index must surpass the 22,400 mark to trigger a new 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.”
On Bank Nifty, the prices have rebounded from the lower band of the rising channel pattern and are moving towards the upper band.
‘’Once sustained above 47,500 there are strong chances that the index is poised to surpass its all-time high of 48,500 marks in the near term. The current support for the index is established in the range of 47,000-46,900, and any pullback towards this support zone is seen as a favourable buying opportunity,” said Master Capital Services’ Arvinder Singh Nanda.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 03 Mar 2024, 05:48 AM IST
