NEW DELHI: Market witnessed bouts of volatility during the week gone by due to Indo-Pak tensions, the expiry of February F&O contracts and macroeconomic numbers.
However, signs of easing tensions between India and Pakistan and positive sentiment in Asian peers supported domestic market to log healthy gains on Friday, wrapping the week on a positive note.
For the week, Sensex climbed 192 points or 0.54 per cent, while the Nifty added 72 points or 0.67 per cent.
While the development in Indo-Pak relationship will remain a key thing to watch, macroeconomic numbers, global sentiment and FPI inflow will also remain major factors that will dictate market movement in the coming truncated week.
Indian equity, commodity and forex markets will be closed on Monday for Mahashivratri.
Let’s take a look at the factors that will influence the market mood in the coming week:
Indo-Pak moves: Although it looks that much tension between the two neighbouring countries has eased after Pakistan returned the captured IAF pilot Abhinandan Varthaman, reports of sporadic skirmishes between the two countries are still coming in. What transpires on this front will have a conspicuous impact on the market.
The political pulse: General elections are approaching and at this juncture, nothing is as major a theme for market as this mega event. Several experts and think tanks have indicated in the last few days that India’s aerial strikes on Pakistan have boosted Modi’s prospects, which was looking uncertain a few weeks earlier. It cannot be denied that market looked happy on the possibility of a stable government with comfortable majority that can take tough policy decisions. Market will keep watching how things at the political front takes shape in coming days.
US-China trade talks: Positive signals from the US-China trade negotiations kept global markets upbeat in the past few sessions. The US delayed higher US import tariffs on Chinese products – to 25 per cent from 10 per cent – that was to come into effect on March 1. A meeting between the US President Donald Trump and his Chinese counterpart Xi Jinping is expected in the coming week which may bear fruit, experts said.
ECB meet: The European Central Bank (ECB) will announce its rate decision on March 7. While the rates are unlikely to change, market is hoping another doze of euro zone stimulus ahead of ECB’s meet even as it has been downplaying the concerns of global economic slowdown. As per Reuters, the ECB will take a tentative step next week to prop up the eurozone economy, signaling fresh stimulus to keep banks lending.
Macro-meter: India’s Nikkei Services PMI for February will be released on Tuesday. Among the significant global macro numbers, market will notice US new home sales data for December, US ISM non-manufacturing PMI data for February, US balance of trade data for December, China’s balance of trade data for January, US non farm payrolls data for February, fourth-quarter GDP of eurozone and Japan and China’s February CPI.
Crude’s course: Crude oil prices fell nearly 2 per cent on Friday, settling about 3 per cent lower for the week dragged by concerns over global demand growth. Analysts say economic slowdown can bring the rate of global fuel consumption lower his year, hitting the prices of the commodity. The assessment makes senses considering the fact that oil prices fell last week despite supply cuts by Opec and sanctions on Venezuela and Iran. Easing crude oil prices will push the Indian rupee higher and can boost FPI inflow in the Indian market.
Technical outlook: The Nifty index closed almost at its 200-day moving average on Friday. However, the technical charts are still not giving a decisive signal. “The bias for the market as per daily charts remains positive, but weekly chart is showing that the Nifty has formed a small-body positive candle with high upper and lower shadows which is signalling volatility,” said Nagaraj Shetti of HDFC Securities. Market may have a narrow range in this truncated week, said Vaishali Parekh, Senior Technical Analyst at Prabhudas Lilladher. The support for the week is at 35,40010,670, while resistance is at 36,730/11,080, she added.