Nifty ended the March series on Thursday with gains of 1.6% amid significant monthly volatility. When markets resume trading on Monday, a host of important domestic and global events are likely to impact them.
“Benchmark indices logged a second week of gains, ending the final trading week of fiscal year 2024 on an optimistic note. Nifty almost tested the previous all-time high above 22,500 on the expiry day and ended just above 22,300 with weekly gains of over 1%. On a weekly basis, sectoral indices posted mixed performances with realty, gaining the most followed by Auto and Infra, and the sector which fell the most was the IT sector,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services.
In his view, the outlook for the market this week will be guided by a slew of global and domestic events, including the Reserve Bank of India’s monetary policy, auto sales data, the US and India manufacturing PMI, among others.
Indian and US markets were closed for trading on Friday.
Factors that are likely to impact movement when markets reopen this week:
1) RBI Policy
RBI’s rate-setting committee will be meeting this week to announce policy rates and also give its commentary on the economy and inflation. D-Street is expected to track this bimonthly event. The banking regulator is expected to leave interest rates unchanged.
2) US Markets
Handover from the US markets was strong with major headline indices on the Wall Street ending higher on Thursday. While Dow 30 ended at 39,760.10, up by 477.75 points or 1.22%, the S&P 500 settled at 5,248.49, higher by 44.91 points or 0.86%. Meanwhile, the Nasdaq Composite gained by over 83.82 points or 0.51% to end at 16,399.50 on Thursday.
When Indian markets reopen on Monday, they will take cues from the Thursday closing of the US markets. They will also track movement in GIFT Nifty futures on Monday. The latter is an early indicator of movement in the Nifty50.
3) Rupee vs Dollar
The Indian rupee closed slightly weaker on Thursday, pressured by weak Asian peers and strong dollar demand from local companies, but likely intervention from the RBI limited losses. The rupee ended at 83.40 against the US dollar, marginally lower from its close at 83.3725 in the previous session, when it had dropped to a record low of 83.45. The RBI sold dollars via state-run banks to prevent further losses on Thursday, four traders told Reuters.
“Rupee is expected to remain range bound to weak with the market watching RBI support at 83.40. The range for next week is expected to be between 83.25 and 83.50. Exporters are expected to sell near term at these levels while importers need to buy dips to hedge their respective positions,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said.
4) Corporate Action
April 4, Thursday, will be the ex-date and record date for the sub-division of Cupid Limited’s shares. April 5, Friday, will be the ex-date and record date for the subdivision of Bodhi Tree Multimedia.
5) Technical Factors
On Thursday, Nifty witnessed bullish momentum after crossing its 20-DMA though it is trading near the resistance zone around its previous all-time high of 22,526, Pravesh Gour, Senior Technical Analyst at Swastika Investmart, said. In his view, if Nifty manages to cross this level, bullish momentum would continue towards the 22,800 and 23,000 levels, while on the downside, 20-DMA around 22,150 will now act as an immediate support level with the psychological mark placed at 22,000 acting as a strong support level.
As for Bank Nifty, the 12-stock index found an immediate and minor hurdle around 47,500, and if this mark is breached, an upside between 48,200 and 48,600 will open. On the downside, 20-DMA of 47000 should act as an immediate support level, Gour said, adding that clusters of 50 and 100-DMA around 46,300 will be crucial support levels.
6) FII/DII Action
The foreign institutional investors (FIIs) were net buyers of Indian equities and purchased shares worth Rs 188 crore on Thursday, while the domestic institutional investors (DIIs) were also net buyers to the tune of Rs 2,692 crore.
The performance of domestic and foreign investors will have an impact on the way movement happens in the domestic stock markets.
7) IPO Action
Kicking off the IPO market in FY25 is the mega Bharti Hexacom public offer, the sole issue next week, which plans to raise around Rs 4,275 crore. The issue opens for subscription on April 3 and closes on April 5. The price band for the issue has been set at Rs 542-Rs 570.
8) Crude Oil
Oil prices jumped more than $1 a barrel on Thursday, closing out the month higher on the prospect of OPEC+ staying the course on production cuts, ongoing attacks on Russia’s energy infrastructure, and a falling US rig count tightening crude supplies. Brent crude futures for May settled at $87.48 a barrel, its highest level since October 27, after gaining $1.39, or 1.6%. The more actively traded June contract settled at $87 a barrel, rising $1.58, with the May contract expiring on Thursday.
US West Texas Intermediate (WTI) crude futures for May delivery settled at $83.17 a barrel, rising $1.82, or 2.2%. On the week, Brent rose 2.4% and WTI gained about 3.2%. Both benchmarks finished higher for a third consecutive month. On MCX, the April crude oil contract settled at Rs 6,915, up by Rs 6 or 0.09%. Oil prices are critical to Indian macros and inflation.
9) Bond Yields
Indian government bond yields posted their first decline in the last four financial years as the central bank held rates, the demand-supply dynamics turned favourable and foreign inflows boosted sentiment. The benchmark 10-year bond yield ended at 7.0556%, following its previous close of 7.0927%. The yield fell 26 basis points (bps) this fiscal, after rising an aggregate of 118 bps over the last three years.
The benchmark bond yield posted its 5th consecutive monthly fall and is down by 30 bps for the November-March period. The yield declined 12 bps for the second straight quarter.
“Markets strong ability to tackle large supply this year, smaller than expected bond borrowing program for FY25, pick up in foreign demand after bond index inclusion announcement and broadly favorable global backdrop have together spurred the rally in bonds, said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. The Reserve Bank of India maintained the repo rate for six straight meetings after raising it by 250 basis points the previous year. Traders are expecting the policy rate to ease in the next financial year.
10) Global Macros
Among important economic data, the US will publish its S&P Global US Manufacturing PMI for March along with ISM Manufacturing Employment numbers. Street will also be following speeches of Fed governors scheduled this week. In the Eurozone, HCOB Eurozone Composite and Services PMI for March will be announced. In the UK, S&P Global/CIPS UK Composite and Services PMI for March will be announced. For India, the HSBC India Manufacturing PMI will be announced.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
