Markets outlook: Global trends, IIP data, foreign funds flow to dictate equities

Ajit Mishra, VP – of Technical Research, at Religare Broking said, “The coming week is a holiday-shortened one and we expect volatility to remain high citing mixed indications. On the data front, participants will be eyeing the IIP data scheduled on March 10. Besides, the performance of global indices, especially the US markets, will be in focus for cues.”

The government will present IIP data for January 2023 on March 10.

On the global front, it is likely that worries of higher inflation will keep investors on the edge as more rate hikes for a longer duration from US Fed can be in the offing.

As per BSE and NSE data, markets will be closed on March 7th on account of the celebration of the Holi festival across India. However, as per reports, associations have asked to change the date to March 8th for the festival.

Last week, on Friday, Sensex closed at 59,808.97 up by 899.62 points or 1.53%. While Nifty 50 ended at 17,594.35 higher by 272.45 points or 1.57%. This would be the largest single-day gain of 2023 as of now. In the week that ended on March 3rd, Sensex climbed 1.3% and the Nifty 50 soared nearly 0.9%.

Vinod Nair, Head of Research at Geojit Financial Services said, “Worries over aggressive rate actions in the US kept global markets in check as data releases suggested possibilities of inflation remaining elevated for a longer period. Global investors’ interest in equity markets weakened owing to fears of an economic slowdown led by high inflation and contractionary monetary policies. This has triggered the US 10-year bond to rise above 4%, driving foreign money out of emerging countries. However, the trend got reversed towards the end of the week as a Fed official commented on the possibility of a favourable rate hike in the next meeting.”

Further, Nair added, “The oversold state of the domestic market, along with encouraging macro-economic data and reports of foreign investment in Adani stocks, added optimism.”

Adani stocks held a strong rally in most of the last week due to huge block deals especially ₹15,446 crore buying from GQG Partners.

Also, Nair said, “the manufacturing PMI reported better than predicted at 55.3, while the services PMI expanded to its 12-year high of 59.4. However, India’s Q3 FY23 GDP statistics came in slightly below expectations at 4.4%.”

These factors have dictated markets since the past week.

Going ahead, Mishra said, “Though the recovery in the index has eased some pressure, Nifty has multiple hurdles to cross to confirm the trend reversal. It has recently surpassed the resistance zone of the long-term moving average( 200 EMA) and now sustainability would be critical to extend the rebound and inch towards the next major hurdle i.e. 18000 level.”

Religare Broking’s expert believes the outperformance of the banking and financials is certainly encouraging however participation of other sectors like IT, auto and energy is equally important to strengthen the recovery.

Meanwhile, Mishra recommended continuing with a stock-specific trading approach amid mixed cues, with a focus on overnight risk management.

Moreover, on Nifty 50, Rohan Patil, Technical Analyst, SAMCO Securities said, for the past 5 weeks, the prices were hovering marginally above their 50-week EMA which is placed at 17,458 levels on the weekly scale. Index has also formed a Hammer like candle stick pattern where prices have shown strength from the lower levels and have formed a tail at the low and upper body closed near the high.

Patil added, the momentum oscillator RSI (14) on the daily chart has formed a triple bottom pattern at around 30 levels but is facing an overhead resistance at 55 levels.

Adding he said, “technically, Friday’s bullish candle has shown optimism amongst the traders but the index needs to cross 17,800 levels on the higher side for a shift in the momentum. On the lower side, 17,350 and 17,250 will act as an anchor point for the index.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.