The Indian markets shall mainly be influenced by multiple factors including macroeconomic data, Indian and US inflation data, and global cues among others in the coming week, according to analysts.
This week, investors will be looking for the major macroeconomic data starting with the Consumer Price Index (CPI) for February to be out on March 13. Also, the Wholesale Price Index (WPI) data for February will be released a day later, on March 14. On the same day, the market participants will be eyeing the Balance of Payment (Exports and Imports) data. The Society of Indian Automobile Manufacturers (SIAM) will come out with the total passenger vehicle sales data on the same day. The foreign exchange reserves data is going to be released on March 17.
Meanwhile, the second phase of the Budget session will begin on Monday (March 13) and will continue till April 6. During the session, the focus will be on the discussion of the demands for grants for various ministries apart from the government’s legislative agenda.
Vinod Nair, Head of Research at Geojit Financial Services, said: “The global market has fallen back into the grip of uncertainty following the Fed chief’s comment that signalled the possibility of a prolonged and faster rate hike, contradicting a dovish comment made by another Fed official last week. The market now anticipates a 50 bps rate hike, which has pushed the dollar index to a three-month high. Selling intensified towards the end of the week following further negative cues from the US market and as the market awaited the release of US unemployment and non-farm payroll data, which will have a significant impact on the upcoming Fed meeting.”
Key factors that will keep traders busy next week:
CPI Inflation
The monthly retail inflation for February will be released on March 13 and WPI inflation on March 14. The market will closely watch both data points as it is expected to decide the next course of action by the Reserve Bank of India in its next policy meeting scheduled in the first week of April.
“We expect CPI inflation to have moderated in February, after the material upside surprise in January. We forecast February CPI inflation at 6.3 percent YoY and expect the RBI’s preferred core inflation measure to have edged down to 6 percent YoY in February, partly due to a high base,” Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics, Barclays said.
Adani Group Stocks
Adani Group stocks may remain in focus as a Financial Times reported that Gautam Adani, who owns diversified Adani group, is planning to sell stake worth around $450 million in Ambuja Cements. The group holds 63 percent stake in Ambuja Cements which was acquired for $10.5 billion last year.
Further, both the leading bourses NSE and BSE on March 10 said two Adani Group firms — Adani Transmission and Adani Total Gas — will be put under the second stage of the long term additional surveillance measures framework, effective from March 13 as per the circular available on the exchanges.
Adani Enterprises, Adani Power and Adani Wilmar are already under the short-term additional surveillance measure (ASM) framework Stage – I since March 9, while NDTV and Adani Green Energy are already under the long term ASM framework Stage – II.
Nifty – Technical Outlook
Amol Athawale, Deputy Vice President of Technical Research at Kotak Securities, said technically, the Nifty has formed a strong bearish candle on weekly charts and it is comfortably trading below the 20 and 50-day SMA. “For the positional traders, 17,550 would act as a medium-term resistance zone and below the same, the index could slip till 17150.
On the flip side, a minor pullback rally is possible, if the index trades above 17425 and could move up to 17480-17500. Meanwhile, Bank Nifty also breached the important support level of 41,000 or 20-day SMA (Simple Moving Average) which is broadly negative. Below the same, the Bank Nifty could retest the level of 40,000-39,800,” he concluded.
Silicon Valley Bank Crisis
According to stock market experts, falling banking stocks dragged other key benchmark indices like Nifty and Sensex on Friday session. But, Silicon Valley Bank news of bankruptcy won’t last long as it is completely sentimental news for Dalal Street. From fundamental perspective, Indian banks are completely insulated from Silicon Valley Bank and margins of Indian banks have improved in recent quarterly results. They advised bargain hunters to buy quality banking stocks in this fall as these banking stocks would bounce back strongly during trend reversal.
Speaking on the Silicon Valley Bank crisis and its impact on Indian stock market, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “From fundamental perspective, Indian banks have no connect with SVB crisis neither the American bank has any penetration in Indian corporate sector. So, the stock market crash on Friday was only sentimental as bias was already negative on Dalal Street.”
US Inflation
Globally investors will keep an eye on US inflation numbers scheduled on March 14, which is more important for the Federal Reserve before taking decision on interest rates in next policy meeting on March 22.
Fed Chair Jerome Powell in his testimony last week continued with his statement saying higher and potential aggressive policy tightening is needed to control and bring inflation to 2 percent target, but that will still be data dependent.
ECB Interest Rate Decision
Next week, we will also have an interest rate decision to be taken by the European Central Bank on March 16 and February inflation of European Union on March 17.
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