The domestic market experienced another week of disappointment with the benchmark indices shedding nearly 2 per cent in a ripple effect of the banking crisis in the US. A last-hour buying on Friday, however, helped it pare some losses following a rescue package to San Francisco-based First Republic Bank and financial aid to Credit Suisse. The 30-share BSE Sensex rose 355.06 points or 0.62 per cent to settle at 57,989.90 on Friday. The broader NSE Nifty gained 114.45 points or 0.67 per cent to end at 17,100.05.
For fresh cues, market participants will keenly watch out for next week’s US Federal Reserve monetary policy outcome and foward-looking guidance. Crude oil and the Indian currency will also play a crucial role in market movement. Apart from this, the Japanese inflation rate for February will be announced on 24 March, 2023.
“In absence of any major domestic event, the focus would be on the upcoming FOMC meet scheduled on March 21-22. Besides, movement in crude and trend of foreign flows will also be in focus for cues," said Ajit Mishra, VP - Technical Research, Religare Broking Ltd.
US FOMC Meet
The US Federal Reserve policy meeting on March 21-22 will be a key event to watch out for this week. Experts largely expect the Fed to continue with its rate hike path given the inflation above its 2 percent long-term target, though eased to 6 per cent in February from 6.4 percent in January. The core inflation also eased to 5.5 per cent from 5.6 per cent in same period.
US Banking Crisis
The market participants will also keep a close watch on the crisis in the US banking space especially after Silicon Valley Bank filed for bankruptcy and Signature Bank went shut.
San Francisco-based First Republic Bank was the third one facing similar kind of issues but was saved with a $30-billion lifeline from 11 major US banks, including JP Morgan Chase and Morgan Stanley, bringing back the memories of the 2008 global financial crisis.
Experts largely believe the crisis is not only restricted to the US but also seems to be in other parts of world.
In the passing week, Credit Suisse also received a credit line of up to $54 billion from the Swiss National Bank to boost liquidity, but experts are still watching it closely.
Oil prices also caught in a bear trap, after crisis in the banking sector, posting the biggest weekly decline in the current calendar year. Any fall is always a welcome from oil importing countries like India but needs to be watched closely whether the decline is sustainable or not, said experts who still expect supply constraints may continue to support the prices.
Hindustan Aeronautics, Ujjivan Financial Services, GAIL India, SAIL, NALCO, Sun TV Network, Aditya Birla Sun Life AMC, and Glenmark Life Sciences will trade ex-dividend next week.
“Markets may take a breather initially however the upside also seems capped. Nifty could face hurdles around the 17,250-17,400 zone while the 16,600-16,800 zone would provide the needed cushion, in case the situation deteriorates further," Mishra said.
After showing high volatility at the swing low of 16850 levels on Thursday, Nifty showed a sustainable upmove with volatility on Friday and closed the day higher by 114 points, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
A small body of negative candle was formed on the daily chart with long lower shadow. Technically, this pattern, Shetti said, indicates a formation of long legged doji type candle pattern (not a classical one). “Hence, we observe back to back doji pattern in the last two sessions. The current market action suggests that market is in the process of near term bottom formation," he said.
“Nifty on the weekly chart has formed a long bear candle with lower shadow. The negative chart pattern like lower tops and bottoms is intact on the daily chart and the swing low of Thursday at 16850 could be considered as a new lower bottom of the sequence. One may expect Nifty to move up from here towards the next overhead resistance of 17300-17350 levels by next week. Immediate support is at 16950 levels," Shetti said.
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., said: “Banknifty also formed a kind of spinning bottom candlestick formation near the important support level of 38700 and managed to sustain above the 39400 level. Now we can expect a short-covering move towards the 40000 and 40500 levels. On the downside, 38700–38500 is a strong demand zone."
What Should Investors Do This Week?
Since we’re witnessing a mixed trend across sectors, Mishra said that traders should continue with stock-specific approach, with a focus on overnight risk management.
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