Global cues, FIIs to crude oil; factors dictating market trends this week

Domestic stock markets may face volatile trading sessions this week and would be guided by global cues, movement of the rupee and crude oil prices, experts said.

Participants would be keenly tracking the geopolitical developments regarding Russia-Ukraine tensions, which have been weighing on global sentiment for the past few weeks.

See Zee Business Live TV Streaming Below:

"Volatility is expected to remain high next week as well, given the crucial meeting between the US and Russia. Inflationary concern, continuous FIIs selling and monthly F&O expiry could add to the volatility next week," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Ukrainian President Volodymyr Zelenskyy has called for Russian President Vladimir Putin to meet him and seek resolution to the crisis.

Geopolitical tensions and chances of a rate hike by the US Federal Reserve have triggered foreign fund outflows from the Indian equity markets.

"Going forward, investors would be watchful of the outcome of US Federal Reserve policy in March and Russia-Ukraine conflict.

"Crude is on an uptrend and trajectory of crude prices along with inflation in India and globally and the pace of earnings growth in India would be the key factors to watch out for," said Shibani Kurian, Senior EVP & Head- Equity Research, Kotak Mahindra Asset Management Company.

On the domestic front, the ongoing assembly polls in Uttar Pradesh, Uttarakhand, Goa, Punjab and Manipur will also be closely watched, experts said.

Trend in the Indian currency and crude oil prices would continue to influence trading sentiments, they added.

On Friday, the BSE Sensex closed 59.04 points or 0.10 per cent lower at 57,832.97. The NSE Nifty edged lower by 28.30 points or 0.16 per cent to settle at 17,276.30.

On a weekly basis, the Sensex lost 319.95 points or 0.55 per cent and the Nifty fell 98.45 points or 0.56 per cent.

According to Milind Muchhala, Executive Director, Julius Baer India, the uncertainty related to Fed action, and the increasing expectations of a 50 bps rate hike in the March policy amidst a persistently high inflation print, has been plaguing the markets.

Moreover, the recent geopolitical standoff between Russia and Ukraine has further accentuated the uncertainty and led to a risk-off environment.

"We think this elevated volatility can continue for a couple of months more, until we get some more clarity on the inflation trajectory and the Fed action.

"However, at the same time, we think these interim corrections can present a good opportunity to gradually build-up on the equity exposure, as we continue to believe that the earnings momentum will remain a key support for the market," Muchhala said.