Indian markets are likely to remain volatile this week as investors focus on global signals such as the outcome of the US Federal Reserve meeting and the US banking crisis due to a lack of local triggers, several analysts said.
Foreign investor activity and the development of the rupee against the US dollar and Brent crude oil prices will also be watched by traders during the week of March 20-24, they added.
Despite rallying in the past two sessions, the benchmarks – Sensex and Nifty50 – were down about 2% in the prior week on financial, IT, auto and banking stocks selling off, fears of contagion from the American banking crisis having held back investors. on the edge.
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“Absent any major national events, the focus would be on the U.S. Fed’s upcoming Federal Open Market Committee (FOMC) meeting scheduled for March 21-22. foreign fund flows will also be a focus for indices,” said Ajit Mishra, Vice President – Technical Research, Religare Broking Ltd.
Traders expect the U.S. Federal Open Market Committee to opt for a 25 basis point cut or even suspend rate hikes at its meeting as U.S. inflation fell to 6% in February vs. 6.4% a month earlier and the economy is looking at a banking crisis.
“The easing of US inflation has given confidence that the Fed will not opt for a sharp 50 basis point rate hike and may even consider taking a break at the March meeting,” said Vinod Nair, head of research at Geojit Financial Services.
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According to Pravesh Gour, Principal Technical Analyst, Swastika Investmart Ltd, investor confidence has been negatively affected by the turmoil in the US banking sector caused by the failure of Silicon Valley Bank (SVB) and the closure of Signature Bank of New York.
Continued adverse signs in global markets are encouraging investors to turn to safe havens such as the dollar and gold, while FIIs are withdrawing funds from the domestic market in response to the depreciation of the Indian rupee.”
“The pressure was visible across all sectors where banking, finance, autos and IT lost between 1 and 4%. The broader indexes also saw a drop and lost more than 2% each,” said said Ajit Mishra.
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“Besides this Crude Oil and the Rupee will also play an important role in the movement of the market. FIIs and DIIs will also be monitored,” Pravesh Gour said.
Mishra said markets may take a breather initially, but the upside also appears to be capped. Nifty may face obstacles around the 17,250-17,400 zone while the 16,600-16,800 zone will provide the necessary cushion, in case the situation deteriorates further.