The focus of market participants remains on the Russia-Ukraine crisis and its impact on crude. Besides, on the domestic front, participants will be closely eyeing state election results of five states—Uttar Pradesh, Uttarakhand, Goa, Punjab and Manipur—on March 10.
“Along with banking, sectors/stocks having a high dependency on crude are witnessing tremendous pressure while metal, IT and select energy stocks are offering some breather to bulls. We recommend continuing with a selective approach and keeping a check on leveraged positions until the market stabilises,” said Ajit Mishra, VP Research, Religare Broking.
Below are key factors that may be under investor radar this week:
Ukraine war
Russian invasion of Ukraine continues and the situation remains volatile. Western nations have applied sanctions, which have started to hit world markets. Energy market has been rattled due to supply crunch with crude oil prices having reached closer to $120 per barrel. Stocks that use crude as raw material will be under radar.
Inflation
This is another key fallout of the war. Analysts are speculating heavy impact on Indian fiscal math, with retail fuel prices set to soar. Moreover, rising wheat, palm oil, and coal will start hitting the common man hard in the coming days. This may also lead to monetary tightening, which has become the biggest worry for investors.
State elections
We will see the outcome of state elections on March 10. The hard fought election, if results in losses for the ruling party in key states, may have a negative bearing on the market. Analysts believe it will have a limited impact.
FII outflow
In just three sessions in March, foreign investors have withdrawn a net Rs 14,721 crore from the equity market. This is on top of around Rs 70,000 crore in the previous two months of the current calendar year. Analysts fear they will continue to sell mercilessly, and advised investors to be cautious.
Macro data
Investors will also track industrial production and manufacturing production data for January. Both numbers are expected to improve as the economy has largely reached a pre-covid normalcy but if the data is not as per the expectations, it may put some investors on their toes.
Technical outlook
Nifty50 index continued to trade under pressure and closed on a negative note. Volatility continues to be high and almost every day of the week, the index had an opening with a gap.
“Since there has been structural damage to the major uptrend, we reiterate our view that traders should maintain a cautious to bearish bias. Having said this, brief short-covering bounces cannot be ruled out as geopolitical developments will keep influencing our markets. Immediate resistance and support for Nifty50 are now placed at 16,800 and 16,200 respectively,” said Yesha Shah, Head of Equity Research, Samco Securities.
