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HomeNewsWeekly newsWeek Ahead Analysis: Dalal Street Preps for US GDP, Macro Indicators.

Week Ahead Analysis: Dalal Street Preps for US GDP, Macro Indicators.

Week Ahead a rangebound and volatile market in the truncated week due to monthly derivative contract expiry and low volume due to holidays, focusing on US GDP numbers.

The Indian market experienced a recovery in the second half of March due to a dovish Fed policy and strong domestic institutional buying. The recovery drew foreign institutional investors’ selling spree. The US Federal Reserve raised economic growth forecast and maintained interest rates.

The market is expected to be volatile and rangebound in the truncated week ahead due to monthly derivative contract expiry and low volume due to holidays. The focus will be on US GDP numbers. The BSE Sensex and Nifty 50 rose, while the broader markets rebounded after severe corrections in the previous week, with the Nifty Midcap 100 index increasing 1.3% and Smallcap 100 index climbing 1.4%.

The market has been volatile, with most sectors participating except for technology and FMCG. The truncated week and expiry of derivatives may cause volatility, but the Nifty is expected to consolidate at higher levels. Key economic data, including US GDP, will keep investors busy. Market participants will continue to follow global indices, particularly the US markets, and prefer index majors and large midcaps. The market will remain closed on March 25 and 29 for Holi and Good Friday.

Key factors for upcoming week

US GDP

Investors are closely monitoring the quarterly US GDP data due on March 28. The economy grew 3.2% in the October-December quarter of 2023, compared to the previous estimate of 3.3 percent. The full year growth for 2023 is expected to be 2.5 percent, compared to the previous year’s 1.9%.

Global Indicators

Participants will analyze GDP, new home sales, durable goods orders, jobs, PCE prices, personal income & spending from the US, Bank of Japan’s monetary policy meeting minutes, UK GDP numbers, and China’s current account data next week.

Local Indicators

The market will release current account and external debt numbers for Q3FY24 on March 28, fiscal deficit and infrastructure output data for February, and foreign exchange reserves for week ended March 22.

Fii and Dii flow

The market experienced a subdued inflow from foreign institutional investors, limiting its major upside. However, consistent big buying by domestic institutional investors has lifted the market mood and provided support. FIIs net sold Rs 8,365.53 crore worth of equity shares during the week ended March 22, while DIIs significantly compensated for the outflow by buying 19,351.62 crore shares. DIIs monthly buying in March was the highest since May 2022, while FIIs net inflow in the current month stood at Rs 946 crore.

Grey Market action- IPOs

The primary market is expected to be busy next week due to significant action in the SME segment. SRM Contractors will be the only initial public offer hitting Dalal Street with a fund raising plan of Rs 130 crore. There will be 12 IPOs opening for subscription, with two listings in the SME segment. Five companies, Trust Fintech, Vruddhi Engineering Works, Blue Pebble, Aspire & Innovative Advertising, and GConnect Logitech and Supply Chain will launch IPOs during March 26-28. Radiowalla Network and TAC Infosec public issues will be opened for three days on March 27. Five IPOs from Yash Optics & Lens, Jay Kailash Namkeen, K2 Infragen, Aluwind Architectural, and Creative Graphics Solutions India will be launched on March 28.

Vishwas Agri Seeds, Naman In-Store, Chatha Foods, and Omfurn India will close their IPOs, list equity shares, and list on the BSE SME and NSE Emerge respectively.

Technicals

The Nifty 50 may remain rangebound unless it breaks 22,200 on the higher side, with immediate support at 21,950 and key support at 21,700 level. The index has formed a bullish candlestick pattern with a long lower shadow, indicating buying interest at lower levels. A buy-on-dips stance is advisable as long as 21,700 holds, but a breach could lead the index towards the 21,600 – 21,500 range. On the upside, levels of 22,200 – 22,450 are expected to pose strong resistance in the coming week.

F&O Outlook

The Nifty 50 is expected to face volatility in the coming week due to the monthly F&O expiry on March 28. Support is expected at 21,900-21,800, with higher hurdles at 22,100-22,300 and 22,500 mark.

The maximum open interest on the Call side was 23,000 strikes, followed by 22,500, 22,700, and 22,000 strikes, with meaningful writing at 22,500, 22,600, and 23,000 strikes. On the Put side, the maximum open interest was 22,000 strikes, followed by 22,100, and 21,500 strikes.

India Vix

The market experienced a sharp drop in volatility, causing strength. Experts believe if current levels persist, it may provide more comfort for bulls. India VIX fell 10.74 percent to 12.22, lowest since November 20-24.

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