Global trends, oil price to dictate market trend this week: Analysts
Investments by FPIs as well as domestic investors and movement of rupee against the US dollar are likely to be closely watched for cues
New Delhi: Stock markets will focus on long-term bond yield trends, crude oil prices and macroeconomic data this week as investors look for cues amid volatility, according to analysts.
Besides, investments by FPIs (foreign portfolio investors) as well as domestic investors, movement of rupee against the US dollar and developments on the coronavirus front are likely to be closely watched for cues.
“The US 10 Year G-Sec yields have surpassed 1.5% on a closing basis which is somewhat negative for global equities. The Dollar Index has also moved up from 90 to 92 level, which is seen as a negative for emerging market currencies and also equities.
“In the absence of any major domestic trigger Indian markets could take a cue from global developments and the US markets,” said Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities. The tone of the market seems to be on the downside, for now, Oza added.
On March 5, benchmark BSE Sensex tumbled over 440 points and the NSE Nifty cracked below the psychological 15,000-level amid relentless sell-off in global equities as US bond market turmoil continued to rattle investors. The 30-share Sensex plummeted by 440.76 points or 0.87% to close at 50,405.32, continuing its falling trend for the second day on March 5 due to concerns over bond yields. The NSE barometer Nifty ended lower by 142.65 points or 0.95% at 14,938.10.
“In the coming week, the market will be mainly focusing on the expectations on whether the Fed, in its upcoming meeting, will maintain its accommodative stance in a rising bond yield market. Additionally, Fed’s measures to maintain low-interest rate and high liquidity will also provide relief to the market sentiments,” said Vinod Nair, Head of Research at Geojit Financial Services.
On a weekly basis, the Sensex gained 1,305.33 points or 2.65%. Analysts, however, believe the broader market is expected to consolidate or correct further amid a bearish market sentiment.
“On a weekly basis, despite the market closing in the positive territory the market mood was sluggish. A substantial jump in the long-term treasury yields and upward activity in the dollar index towards 92, resulted in weakness across the globe,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.
Further, Chouhan noted that “in the coming week, we could see Nifty/ Sensex touching minimum 14,750/ 50,000 or 14,550/ 49,300 levels. On the higher side, 15,150/ 51,200 and 15,280/ 51,600 would be major hurdles. The focus should be on FMCG and auto companies”.
Moreover, investors will also track domestic macroeconomic triggers—CPI, WPI and IIP—for further cues. Investors will also track movements in Brent crude prices as rising oil prices are another risk for Indian markets. Brent crude futures, the global oil benchmark, is currently hovering around $69 per barrel.
Meanwhile, foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 2,014.16 crore on Friday, according to exchange data.
According to Deepak Jasani, Head of Retail Research, HDFC Securities, “investors in Indian equities will look at the trend of bond yields abroad to assume higher risk and in the meanwhile, the markets could consolidate/ correct”.
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