Nifty may rise to 18,300; RBI MPC meet, global trends to drive markets this week
- Investors now await the outcome of RBI's interest rate decision on Wednesday
Amid a raging controversy over a meltdown in Adani group stocks, a number of significant events are scheduled for the coming week including trade data of two major economies, RBI's interest rate decision among others, which may keep the traders on tenterhooks.
Investors across the world will keenly watch the trade data numbers of two major economies, the US, and the UK, since they will decide the direction of global indices, said analysts.
Besides, the RBI Monetary Policy Committee (MPC) meeting will be taking the centre stage. D-Street expects a 25 basis points (bps) rate hike and a conservative tone from the central bank.
In the week ahead, ICICI Direct expects Nifty to extend its consolidation in the 17300-18000 range with “positive bias”. The brokerage has advised investors to use volatility during the week as a “buying opportunity”.
“Going ahead while we are witnessing signs of support at lower levels near 17300, sustainability above Budget day high and 20-day ema around 18000 would expedite the up move,” ICICI Direct said in its report.
“Structurally, index has retraced its 9 week rally from September 2022 lows, by 61.8% over past nine weeks indicating the shallow nature of retracement and inherent strength. Use dips to accumulate quality stocks from medium term perspective,” it added.
From the volatility perspective, post budget, India volatility index has declined considerably to 14.5, down 17% for the week, despite large index moves, the brokerage said.
It further said that markets are likely to stabilise near current levels as most of the results from index heavyweights is over along with the crucial events.
Sectors to outperform, picks
ICICI Direct expects IT, BFSI, Auto, Infra to relatively outperform in the coming week.
Preferred large caps: HDFC Bank, SBI, Maruti Suzuki, TCS, Titan, Ultratech Cement, L&T, Tata Steel
Preferred Midcaps: PFC, Federal Bank, Sonata Software, FSL, Apollo Tyres, NCC, Jindal Saw, Sterlite Technologies, Data Patterns
“There will be a number of significant events taking place in the forthcoming week. To begin with, we have a balance of trade data of two major economies, the US, and the UK. China will publish its M-o-M and Y-o-Y inflation figures. The UK will also reveal GDP and three-month average GDP figures," said Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities.
“Back home, the outcome of the RBI MPC's two-day meeting (during February 6-8) will be taking the center stage. The CPI inflation has been below the RBI’s tolerance band of 6% for two consecutive months,” Sheth said, adding: “Considering the number of key events in the upcoming week, investors are advised to remain vigilant and prudent in their investing picks.”
On FPIs
The massive foreign portfolio investors (FPIs) selling in Indian markets have impacted market sentiments. So far, the FPIs have sold in the cash market a mammoth ₹53,887 crore in January, followed up with ₹3,212 crore of selling in February.
“FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. This ‘short India and long other cheaper markets’ strategy has led to big underperformance of the Indian market, so far this year,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
While China, Hong Kong and South Korea are up by 4.71%, 7.52 % and 11.45% , respectively, YTD India is down by 1.89%. “This kind of underperformance is unlikely to last long. FIIs have also been hugely short in the derivatives market,” said Vijayakumar.
The chief investment strategist added, “The Budget turned out to be far better than expected. But the market couldn’t hold on to the gains since the Adani stock crisis impacted sentiments. Banking stocks were impacted on fears of Adani exposure impacting banks. But the RBI message that the Indian banking system is healthy improved sentiments leading to a late rally in banking stocks.”
On Friday, equity benchmarks Sensex and Nifty rallied over 1 per cent due to heavy buying in banking and financial counters amid mixed trend in the global markets.
The 30-share BSE benchmark Sensex zoomed 909.64 points or 1.52 per cent to settle at 60,841.88. During the day, it jumped 973.1 points or 1.62 per cent to 60,905.34.
The broader NSE Nifty advanced 243.65 points or 1.38 per cent to end at 17,854.05.
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