Sensex, Nifty this week: From India’s industrial production to US inflation, factors that may drive Dalal Street
last week the Indian markets ended in green as global rating agency Moody’s raised India’s Gross Domestic Product (GDP) growth forecast for the 2024 calendar year to 6.8%, from 6.1% estimated earlier, on the back of ‘stronger-than-expected’ economic data of 2023 and fading global economic headwinds.
This week India’s IIP, CPI, WPI, and Exports and Imports data, along with Industrial Production and Inflation Rate in the US are major events that will keep the markets buzzing.
Economic data: In the coming week, traders will be looking for the major macro-economic data starting with Index of industrial production (IIP) for the month of January to be out on March 12. On the same day, Consumer Price Index (CPI) for the month of February also going to be out. The Wholesale Price Index (WPI) data for the month of February will be released on March 14. Market participants will be eyeing the Balance of Trade (Exports and Imports) data, which is slated to be released on March 15.
US market data: On the global front, investors will be eyeing economic data from the United States, starting with Consumer Inflation Expectations on March 11, Inflation Rate or CPI, Redbook on March 12, Producer prices data, Initial Jobless Claims on March 14, Import- export data, Industrial Production, Manufacturing Production, and Baker Hughes Oil Rig Count on March 15.
Foreign investments: Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services says “FPIs are turning steady buyers in India as evidenced by the net buying of equity worth Rs 11823 crores this month up to 8th March. FPIs were big sellers in January and very modest buyers in February”.
He added, there are mainly three reasons for this renewed interest in India. One, the Indian market is showing great resilience, and every dip is getting bought. FPIs have been forced to buy the same shares that they sold at higher prices, which is a losing game.
Two, US bond yields have been steadily declining (the 10-year yield has declined from above 4.3 % to 4.08% now) and this has halted the switch from equity to bonds. The FPI strategy of selling equity in emerging markets to buy US bonds has stopped. Three, the Indian economy is growing at better-than-expected rates (FY24 GDP growth is likely to be around 7.6%, far ahead of other large economies) and this will have a positive impact on corporate earnings and consequently on the stock market.
“These positive developments and the sustained flow of funds into the market – both directly and through institutions- can keep the market resilient. However, high valuations are a matter of concern. Valuations in the mid and small-cap segments are excessive and unjustifiable. Correction in this segment is only a matter of time”, Vijayakumar said.
Market outlook: Nifty: Deepak Jasani, Head of Retail Research at HDFC Securities says Nifty witnessed a small range (94 points high-low band) ahead of the long weekend on Mar 07. It formed a doji-like pattern on daily charts hinting at the possibility of a breather ahead.
“On weekly charts, Nifty rose 0.51% and displays a large lower shadow over the past four weeks, suggesting consistent dip buying. Nifty could now stay in the 22124-22810 band for the near term with a mild upside bias” Jasani commented.
Bank Nifty: According to Rupak De, Senior Technical & Derivative Analyst at LKP Securities Bank Nifty faced resistance at the 48,000 level, finding support at 47,750. Nevertheless, the weekly closure indicates a resilient bullish momentum, with pivotal support identified at 47,500 and resistance at 48,200.
“A conclusive breach above the 48,200 threshold, confirmed by a closing basis, could catalyze a bullish upswing towards levels of 48,500 and 48,800”, DE said.
