US Fed FOMC meeting, US bank crisis, FIIs flow among other top factors for Dalal Street this week

The Indian markets are expected to remain volatile this week as investors will focus on global cues such as the outcome of the US Federal Reserve meeting and the US banking crisis due to a lack of local triggers, several analysts estimated.

The foreign investors' activity and movement in the rupee against the US dollar and Brent crude oil prices will also be watched by traders in the week between 20-24 March, they added.

Despite a recovery in the last two sessions, the benchmark indices – Sensex and Nifty50 – declined by around 2 per cent in the previous week due to selling in financials, IT, auto and banking stocks as fears of contagion of the US banking crisis kept investors on the edge.

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"In absence of any major domestic event, the focus would be on the upcoming US Fed’s Federal Open Market Committee (FOMC) meet scheduled on March 21-22. Besides, movement in crude and trend of foreign fund flows will also be in focus for cues," Ajit Mishra, VP - Technical Research, Religare Broking Ltd said.

Traders are expecting the US Federal Open Market Committee to go for a lower 25 basis point cut or even pause the rate hike in its meeting as US inflation has eased to 6 per cent in February from 6.4 per cent a month earlier and the economy stares at a banking crisis.

"Easing US inflation provided confidence that the Fed would not opt for a harsh rate hike of 50 bps and might even consider taking a break during the March meeting," Vinod Nair, Head of Research at Geojit Financial Services, said.

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According to Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, investors' confidence was negatively impacted by the turbulence in the US banking industry caused by Silicon Valley Bank's (SVB) bankruptcy and the closure of New York's Signature Bank.

Consistently unfavourable 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 Indian rupee's depreciation."

"The pressure was visible across sectors wherein banking, financials, auto and IT shed in the range of 1-4 per cent. The broader indices too witnessed a fall and lost over 2 per cent each," Ajit Mishra said.

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"Apart from this crude oil and the rupee will also play an important role in market movement. FIIs and DIIs will also be watched," Pravesh Gour said.

Mishra said that markets may take a breather initially however the upside also seems capped. Nifty could face hurdles around the 17,250-17,400 zone while the 16,600-16,800 zone would provide the needed cushion, in case the situation deteriorates further.