Dalal Street Corner: Nifty, Sensex end with over 2% gains in highly charged week; what should investors do on Monday?

Bucking global cues and volatility, benchmarks ended more than 2% higher for the week ended March 11. The Nifty50 ended above 16,600, while the Sensex too ended in the green as the 30-share index added 86 points propelled by BJP's strong show in the recent state assembly elections.  

The benchmarks settled positive four out five sessions this week after closing by more than 2% lower on Monday.  

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Pharma, healthcare, PSU Bank saw buying interest on Friday, while auto and IT sectors were seen trading under pressure.  

In the broader market, Nifty midcap and small cap ended 0.6% and 0.9% higher respectively.  

Focus to shift on Fed policy, inflation and Russia-Ukraine war 

Experts were of the view that the impact of state elections, which primarily drove markets to end positive this week will fizzle out soon, while the markets will remain with geopolitical concerns related to Russia-Ukraine war, inflation in the US and Fed policies.  

"After the strong recovery during the week, the domestic market trend turned cautious on Friday, as focus shifted to next week’s upcoming issues like inflation, BoE & US Fed policy," said Vinod Nair, Head of Research at Geojit Financial Services.  

US CPI inflation recorded a 40-year high due to high gasoline, food and housing cost, adding doubts to global trend, said Nair.  

He said inflation levels in India & abroad are poised to rise even higher in March, though on a temporary basis, considering the impact of the Russia-Ukraine issue.  

"However, if developments go well like diplomatic progress on war, revert of commodity price and in-line rate hike decision, stock market trend should be stable & healthy as recent negative factors are largely factored in the price correction," Nair added. 

Indices remained range bound today on worries over increasing cost pressures on corporates, rising inflation globally and slowing automobile despatches to dealers amidst supply constraints, said S Ranganathan, Head of Research at LKP securities 

"Pharma stocks bucked the trend with the Healthcare Index moving up and the breadth in the broader markets was encouraging. Sugar stocks gained post-election results and ethanol push, while paper stocks were in demand post price hikes that are seen to offset input cost pressures," Ranganathan added.  

"Volatility could continue to provide opportunities to build equity exposure" 

The Indian equity markets, in line with the global markets, continue to display a very high level of volatility, reacting to the bouts of incremental news flow on the geopolitical front, said Milind Muchhala, Executive Director, Julius Baer. 

"While the markets were preparing for the known unknowns of Fed action, State elections and the big-ticket LIC IPO, the Russia-Ukraine turmoil clearly emerged as a tail risk, adding to the uncertainty for both the short-term and the medium-term," he said.  

While we remain constructive on the overall India story and the equity markets over the period, one needs to tread a bit cautiously in the very near term, as the volatility could continue to provide opportunities to gradually build-up on the equity exposure, said Muchhala. 

Technical Check 

Nifty has staged a strong bounce back from structural value level of 15900, said Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities. 

"This along with momentum reversal confirmation suggests “buy on dips” strategy should work well in the near-term. We expect March series to trade with a positive bias with initial targets placed at 17100-17200," Agrawal 

We remain positive on the broader markets with the NBFC and FMCG space giving good risk-reward opportunities, he said, adding metals stocks remain in the high volatile zone making it difficult to define risk levels. 

(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.)