Bond yields are moving erratically which could keep volatility on the higher side. Even though the European bond yields have come off sharply, US 10-year bond yield is still trading at the yearly high level of 1.6 per cent.
“Going by the recent moves there is selling pressure at higher levels which is capping the gains in Nifty50. All eyes will be on the Fed action going forward. Nifty50 needs to sustain above 15,000 for a couple of days for the uptrend to continue,” said Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities.
Primary market investors will face the problem of plenty as many as six issues will be active during the week. Besides, inflation data and export-import data will also be eyed by market participants.
Here are key factors that will guide the market this week:
Bond yields
The biggest worry for the equity market right now is rising bond yields, which if does not pause, will result in fund outflow from the Indian market. US 10-year yields, which started rising in Asia, reached 1.642 per cent, at more than one-year peak.
The US yield curve, a barometer of risk sentiment, also steepened sharply, with the spread between 2-year and 10-year notes at 148.34 basis points, the widest since September 2015.
Fed meet
The market will be keenly focusing on the upcoming US Federal Reserve policy meeting scheduled during March 16-17. The market is waiting for a confirmation from the monetary agency that an accommodative stance will be maintained even during an elevated inflation forecast, said Vinod Nair, Head of Research at Geojit Financial Services.
IPO heavy week
The upcoming week is perhaps going to be the busiest one in recent history, as far as the primary market is concerned. As many as six issues will be active during the week. They include Anupam Rasayan, bidding for which has already begun. Besides, Suryoday Small Finance Bank, Kalyan Jewellers, Laxmi Organic Industries, Craftsman Automation and Nazara Technologies are other issues that will open for bidding.
Macro data
The Indian government will release wholesale inflation data for February that will be tracked by traders, especially those active in the money market. Retail inflation has already shown an uptick, creating a fresh headache for RBI, though it remains in the target range of the central bank.
Market will also react to IIP and CPI inflation data, which came in after the market hours on Friday. Retail inflation came in higher than the previous month at 5.03 per cent for February as against 4.06 per cent in the previous month. IIP contracted by 1.6 per cent for January as against 1 per cent growth in the previous month. Next, the WPI inflation is scheduled for March 15.
Covid cases
In one of the biggest risks to the market, traders will keenly watch what is apparently the second wave of the pandemic in India. With 24,882 new infections on Saturday, India recorded its highest single-day spike so far this year. The caseload now stands at 1,13,33,728, according to Union health ministry data. However, at the same time vaccination drive is also gathering pace, inducing a sense of relief.
Technical outlook
Nifty closed the week on a neutral note after experiencing selling pressure around its all-time high. The index is now contained within a narrow range of 14,850 to 15,270. Market breadth also remained very choppy throughout the week.
“Break of the said range on either side will dictate the trend in the short term. However, on a larger picture markets still remain deviated on the upside and a break below the recent lows of 14,470 will trigger short-term weakness. Until then we suggest traders maintain a neutral to negative outlook,” said Nirali Shah, Head of Equity Research, Samco Securities.
