Macro data, global cues to drive Indian equity market


After the recent heavy sell-off, global market trends and domestic macro-economic data will drive the Indian equity indices in the coming week.

“Indian equity markets posted second weekly loss with huge sell-off on Friday following sharp spike in global bond yields. Going ahead the market may continue with its consolidation given weak global cues,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.

He noted that investors would be closely tracking bond yields, geopolitical tensions and inflation data for market direction and would monitor developments around new US stimulus announcement.

Further, he said that to recently released Q3FY21 GDP data of India, the PMI data scheduled to be released in the coming week would also be eyed upon.

India has officially exited the technical recession phase that was brought about by the Covid-19 pandemic, with official data on Friday showing that the country’s Q3FY21 GDP grew by 0.4 per cent.

“Nifty’s high valuations do not provide much comfort and thus correction was long overdue. Investors should take this opportunity to buy on dips while traders should trade cautiously with stock specific action and book profits in regular intervals,” Khemka said.

V.K. Vijayakumar, Chief investment Strategist at Geojit Financial Services said that the sudden spike in US 10-year yield to around 1.5 per cent has triggered concern about possible capital outflows from emerging markets. The bears are cashing in on this fear.

“This is still a structural bull market. Corrections are normal and desirable in a bull market,” he said.

He was of the view that traders can wait for a consolidation.

“Investors can utilise sharp corrections to buy quality stocks in IT, financials particularly private sector banking and economy facing segments like cement & metal stocks,” added Vijayakumar.

Joseph Thomas, Head of Research, Emkay Wealth Management noted that rising inflationary expectations and rising yields have the potential to adversely affect the equity sentiment and the equity markets.

During the week ended Friday the Nifty and the Sensex fell by 3 per cent and 3.5 per cent respectively. Markets ended in the green on three out of five trading days.

“Nifty formed a bearish evening star formation on daily charts on February 26. In the process, near term support of 14,635 has been breached. Now the Nifty could head towards 14,281-14,336 band over the next few days with some intermittent bounces,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

On the currency front, Sajal Gupta, Head, Forex and Rates at Edelweiss Securities said that the rupee is expected to be in the range of 73.50 to 74.50 per dollar in the coming week.

On Friday, the rupee closed at 73.47 per dollar.