Dalal Street Corner: Market ends nearly 1% lower this week, closes 4 out of 5 sessions in red; what should investors do on Monday?

The Indian market ended the week nearly 1% lower, primarily due to Russia, Ukraine war and rising crude prices. The Nifty50 declined 0.8%, while the S&P BSE slumped 0.9% lower for the week ended March 25. Barring Tuesday (March 22), the benchmark indices closed in the red four out five sessions this week.  

On Friday, Nifty and the Sensex ended with 0.4% cut as the former settled below 17,200 at 17,153 and the latter dropped 233 points to close at 57,362.  

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Nifty mid cap and small cap dropped 0.12 and 0.49% respectively. Sectorally, IT, Pharma, consumer durables and FMCG were seen under maximum pressure, while Realty, PSU Bank, Oil & gas witnessed buying interest in falling market.  

As markets continue to trade with volatility, here is what experts make of the current scenario and explain how it is going to behave going forward. 

''Geopolitical tension, crude spike weighing on Market''

"After the recent 10% rally, the market has turned sideways with a negative bias due to increase in commodity prices, tightening monetary policy and inflationary pressure. Domestic market is showing strong resilience, but to sustain the trend a lot will depend on the outcome of the war & commodity prices, said Vinod Nair, Head of Research at Geojit Financial Services. 

Ease in Covid restrictions in India is a boost for sectors like hospitality, multiplex, transportation etc, leading to the outperformance, he added.  

Stalemate over Ukraine and absence of any big move by the US Fed, have kept the markets rangebound this past one week. I think the situation is likely to persist over the coming weeks as well unless something big happens geopolitically, says Rahul Shah, Co-Head of Research at Equitymaster. 
 
Also, March quarter results could lead to pronounced movements on either side for individual stocks in cases where they come beyond expectations, said Shah.  

What should investors do?  

"Overall, this is a period where the portfolio stays still even as individual stocks move back and forth," said Equitymaster Co-Head of Research . 

The Indian equity markets continue to be in a grind, influenced by and reacting to incremental news flow on the global front, especially related to the geopolitical situation and Fed rhetoric, says Milind Muchhala, Executive Director, Julius Baer,  

He said two key challenges and monitorables for the markets in the near term are the persistent inflationary pressures and the rising bond yields. 

“A prolonged geopolitical situation and elevated prices will gradually start weighing on demand and profitability, and can lead to a cut in growth and earnings estimates. Also, the recent rise in bond yields can have implications for flows and equity valuations. With the markets having pulled back sharply in the past couple of weeks, one can look at creating a small liquidity, as the uncertainty and volatility is likely to continue for some more time with too many moving parts, providing intermittent opportunities,” added Muchhala. 

Ajit Mishra, VP - Research, Religare Broking Ltd said mixed global cues combined with erratic swings in crude are causing discomfort to participants and it might linger in the coming week as well. "On the index front, Nifty has been hovering within a narrow range of 17,000-17,350 and either side break would trigger the next move. Meanwhile, participants have no option but to focus on sectors/stocks which are performing well, while concentrating more on overnight risk management," suggested the expert 

Technical check
Chandan Taparia, Vice President, Analyst-Derivatives, Motilal Oswal Financial Services, said Nifty index despite opening positive failed to surpass 17300 and drifted towards 17076 marks. It witnessed some recovery in last hour of the session but finally it closed the day with losses of around 70 points near to its 50 DEMA, he said.  

"It formed a small bodied Bearish candle on weekly and a daily scale but follow up is missing on both the side. It has got stuck in between a broader trading range of 17000 to 17400 zones from last six trading sessions. Now, it has to hold above 17,100 zones, for an up move towards 17350 and 17500 zones, whereas support exists at 17000 and 16950 zones," added Taparia.  

It was yet another volatile day's trading session as uncertainty surrounding several global developments continues to weigh on investors' minds, said Amol Athawale, Deputy Vice President, Technical Research, Kotak Securities. 

Athawale said that rising US yields have once again raised concerns that the Fed may go for rate hikes, which could prompt overseas investors to shed their exposure in emerging markets.  

"We are of the view that as long as the index is trading below 17325, the correction wave is likely to continue in the near future and below the same the chances of hitting a 200-day SMA or 17000 would turn bright. On extended weakness, the index may fall up to 16900-16870 levels. On the other hand, fresh uptrend is possible only after the level of 17325. Above the same, one quick pullback rally till 17400-17450 is not ruled out," he added.  

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)