The market had another robust week, ending March 17 with benchmarks up 4% on lower oil prices and hopes that the Ukraine-Russia conflict would be resolved through ongoing peace talks. . The US Federal Reserve’s announcement of an expected 25 basis point rate hike came as no shock, and foreign institutional investors (FIIs) turned net buyers cheered. During the week, the BSE Sensex rose 2,314 points to 57,864 and the Nifty50 rose 657 points to 17,287, bringing the total rally to 10% from recent lows. All industries rebounded except metals, which fell half a percent.
Overall, he suggests maintaining a positive but cautious approach while keeping the focus on day-to-day risk management. Absent a positive trigger, market moves should remain limited and investors should continue to invest in selective and fundamentally resilient stocks, says Yesha Shah, head of equity research at Samco Securities. Going forward, the cause of stock market volatility would be the war between Ukraine and Russia which has entered the fourth week now despite the sanctions imposed on Russia by the Western world. Russian and Ukrainian officials have made rounds for peace talks but there is no resolution yet, while Ukrainian President Volodymyr Zelenskyy has urged Russia to come to the table for talks significant peace and security.
But broader markets underperformed benchmarks. The BSE Midcap and Smallcap indices gained 2% each. Given the significant rally over the past eight trading sessions, the market could experience some volatility and limited trading, but any escalation in the war in Ukraine and a COVID spike in China could spoil the bulls’ party, believe the experts. “The recent rebound has certainly eased some pressures, but sustainability will largely depend on global signals. Any news of an escalation in the Russia-Ukraine fight and a deteriorating COVID situation in China could shake sentiment again,” says Ajit Mishra, VP of Research at Religare Broking.
Moscow failed to achieve the goals it set before the start of the military operation to invade Ukraine due to strong resistance from Ukrainians and military forces. As a result, Russian forces began using primarily artillery bombardments in key cities in Ukraine, including kyiv, increasing heavy casualties, rendering people homeless and destroying infrastructure. On the other hand, Ukraine will soon receive American weapons, including Javelin and Stinger missiles. The fear created by the war has completely chilled feelings and forced millions of Ukrainians to flee to countries like Poland, Romania, Hungary, Solvakia and Moldova.
Industrial metals also corrected sharply after Russia and Ukraine stepped up efforts to end the war and virus cases rose in China. Experts expect commodities to remain volatile in the coming days given supply issues, rising COVID cases in China, economic numbers and the stance of central banks. China, the world’s second-largest economy, has suddenly caught the eye, especially after rapidly rising COVID cases led to shutdowns in several cities, fueling fears that economic activity could be affected. Chinese tech stocks, including Alibaba and JD.com, fell quite sharply on fears of delisting from US stock exchanges if accounting standards are not met, but rebounded very strongly on authorities’ promises that more measures could be taken to support the economy.
Oil prices continued to correct in the second week after hitting a 14-year high of around $139 a barrel, but the price movement seems to indicate that they have found a floor above 100 dollars per barrel, which is always a sign of expected equity volatility. market and a risk for oil-importing countries like India, as they have to shell out more money to buy oil from producing countries. Fears of an expected tight supply, given that there is no replacement for Russian oil, have kept prices above $100 a barrel, with Russia the third largest oil exporter. International benchmark Brent crude futures ended the week at $107.9 a barrel, correcting 4% from the previous week’s closing levels.
Concerns about China could prevail unless there is an improvement in the virus situation or concrete efforts are made to stimulate growth, said Ravindra Rao, chief research vice president. on commodities at Kotak Securities. FII’s change in mood is also one of the main reasons for the stock market rally. FIIs were net buyers for the second session on March 17 after consistent selling over the past month. They bought Rs 2,800 crore net of shares on March 17 against Rs 312 crore in the previous session, which instilled confidence among market participants, although FII remained net sellers at Rs 41 617 crore in March so far, in addition to strong sales in the previous five months. US investment adviser The Vanguard Group, Inc., part of the Vanguard Emerging Markets Stock Index Fund, acquired a stake in a total of 19 companies on Thursday by paying Rs 2,277.2 crore, although Integrated Core Strategies (Asia), based in Singapore, sold a stake in 8 companies for Rs 590.4 net. crore.
If FIIs continue to buy in the coming sessions, there could be a good chance the market will head back to an all-time high, experts believe. The Nifty50 formed a significant bullish candle on the daily charts and a robust bullish candle for the second week as it gained almost 2% on Thursday and 4% for the week to close well above its 200 moving average. days (around 16,990), indicating positive bias at Dalal Street and the market appears to have bottomed out at 15,671 for now. The index decisively broke above its significant overhead resistance at 16,800-17,000 levels, indicating that the market is likely to have further positive momentum ahead. Therefore, experts believe there could be another round of buying support in the coming week. “Previously, the area of the 16,800-17,000 level has acted as strong support for the market in the past and its recent downside breakout has resulted in a 1,000 point decline in a short time. Therefore, the current decisive bullish breakout of this area could indicate the continuation of strong short-term bullish momentum,” said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
He adds that potential upside targets to watch are around 17,800-18,000 levels in the coming weeks: “Immediate support is placed at 17,050 levels.” Options data indicated that the Nifty50 could consolidate above the crucial 17,000 mark, while the trading range could be between 16,800 and 17,700 levels for the sessions ahead. Experts believe the data also indicates that 17,500 could be a near-term hurdle for the Nifty50, followed by crucial resistance at 17,800. On weekly expiry, peak open interest for calls was seen at 17,300 strikes followed by 17,500, 17,400 and 17,600 strikes. Writing calls at 17,300 strikes, then 17,600 and 17,400 strikes, while the maximum course of the call was observed at 17,000 strikes, then 18,000 and 16,900 strikes. The maximum open interest for the put was observed at 17,200 strikes followed by 16,500, 17,000 and 16,700 strikes. Put writing was observed at 17,200 moves then 17,100 and 17,300 moves, while there was unwinding put at 16,300 moves then 16,400 and 16,900 moves. “Due to a sharp rise, the call bases have distorted significantly over the past two sessions. However, given the highest sell base of 17,000 strikes where the continued addition is visible, we believe that the Nifty should find support around these levels and we can use any dips towards 17,000 to create new longs,” says ICICI Direct. On the higher side, “while immediate resistance may be encountered around 17 500, the main hurdle for the Nifty remains near 17,800,” the brokerage said. Expectations of short coverage in the banking and cement sectors have materialized. With significant short-term open interest still placed in these stocks , any downside appears to be limited and should provide support for markets in the event of an intermediate decline, the brokerage says.Volatility has seen a considerable drop in recent days, helping the market to get gain more stability.
Experts believe that if volatility falls below the 20 mark, the bulls will be able to enjoy the party even more in the coming sessions. India VIX, the so-called fear index, closed the week at 22.61 levels, down almost 11% from the previous week and 33% from the recent high of 34 levels on February 24. Growth in bank deposits and loans for the fortnight ended March 11 and exchange rate reserves for the week ended March 18 will be published next Friday.
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