Metal indices top gainers in holiday-shortened week; Russia-Ukraine row, Fed policy outcome, inflation data key triggers for next week

The domestic equity market declined nearly 1.5% as auto, metal and realty stocks dragged the market amid rising tensions between Ukraine and Russia and fears of inflation in a holiday-shortened week. 

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Benchmarks opened weak on Friday amid reports of attack on Europe's largest nuclear power plant as oil jumped 4% toward $115 a barrel on Friday in a volatile session as fears over disruption to Russian exports in the face of Western sanctions outweigh the prospect of more Iranian supply in the event of a nuclear deal with Tehran. 

"The Russia-Ukraine conflict, fresh sanctions on Russia by global powers, and reports of the Russian attack on Europe’s biggest nuclear plant in Ukraine added more tension on global investors. Rising oil prices along with uncertainties of supply change disruption have instilled fears of inflation crossing RBI’s tolerance level," said Vinod Nair, Head of Research at Geojit Financial Services. 

Technical check 

The broader Nifty50 tanked 1.53% to end at 16,245.35, while the Sensex dropped 1.40% to 54,333.81 as Nifty midcap and small cap indices dropped 2.08% and 1.78% respectively. Among sectors, auto, metal, realty and consumer durables were seen under maximum pressure as IT was the only sector to end marginally higher in the last trading session of the week.   

Rupak De, Senior Technical Analyst at LKP Securities said Nifty slipped lower after a few days of consolidation on the daily timeframe; which will heighten the possibility of falling below the 16000-mark in the short term. "Immediate support is seen at 161000-16000 bands. On the higher end resistance seen at 16500," he said.  

How indices fared this week?

Meanwhile, Nifty and the Sensex declined 2.5% and 2.7% respectively for the week ended March 4, which also saw a trading holiday on account of Mahashivratri on March 1. Among the four trading days, the markets ended in the red on three consecutive session and settled with nearly 1% gain on Monday.  

Among the indices, Nifty Metal and S&P BSE Metal gained the most as the indices ended higher by 7% and 8% on NSE and BSE respectively in the last four trading sessions.  

S&P BSE Oil and gas (4.9%), S&P CPSE (4.4%), S&P BSE Utilities (4.2%) and S&P BSE Power (3.2%) were other gainers on the BSE in a highly volatile week.  

On the NSE, Nifty CPSE (5.4%), Nifty PSE (4.7%), Nifty Energy (3.8%) and Nifty IT (2.1%) were other prominent gainers in a week dominated by geopolitical tensions and rising crude prices. 

Triggers for next week

March is expected to be an eventful month from Indian market point of view as assembly election exit poll, February inflation data, Fed policy outcome and rate hike by Bank of England (BoE) are due.  

"In the coming week, in addition to geopolitical tensions, the domestic market will look at state election exit poll data and the global market on BoE and Fed policy statements," said Nair.  

He said state elections outcome is unlikely to be a crucial factor but rather than a short-term positive & negative reaction. "Due to war uncertainties, central banks may balance their hawkish policy against expected earlier due to high inflation. It can provide leeway to the market in the short term," 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.)