Derivative expiry, macro-data to drive equity indices (Market Outlook)

Derivative expiry coupled with key macro-economic data points and direction of foreign fund flow will affect the Indian equity market's trajectory during the upcoming week.

According to analysts, hopes of corporate India's earnings revival and formation of a stable Central government post general election 2019 will also have a bearing on the market.

"Going ahead, we expect Nifty to consolidate after correcting further. Global cues also turned sour for growth," said Sahil Kapoor, Chief Market Strategist-Research, Edelweiss Wealth Management.

"However Mid and Small-cap indices may outperform large-cap indices. Investors should now focus on stock specific ideas and probably abstain for leverage index positions."

However, going forward key domestic indices are expected to move in tandem with the global market amid factors such direction of fund flows and movement of the Indian currency, said D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors

On the investment front, provisional figures showed that so far during March foreign institutional investors (FIIs) bought stocks worth Rs 26,232.60 crore.

"Investors across the globe have also increased their exposure towards emerging markets like India on the expectation of an earnings revival," Aggarwal said.

According to Vinod Nair, Head of Research at Geojit Financial Services, another factor which helped market to gain was the continued optimism shown by the FIIs, which were largely driven by expectation of positive outcome from general election.

"Further, emerging markets like in India is benefited by improvement in foreign funds to emerging markets due to dovish policies from global central banks. US Fed indicated that there will be no rate hike this year and to end its ongoing QE tightening program due concern over economic growth."

In terms of currency, the Indian rupee depreciated and closed at Rs 68.95 a US dollar after touching highs of 68.32 during the week.

"Expect the rupee to weaken beyond 69.50 in the coming week owing to global recessionary fears...," said Sajal Gupta, Head Forex and Rates, Edelweiss Securities.

In addition to the rupee's moves, macro-economic points like Index of Eight Core Industries (ECI) figures, along with the country's fiscal deficit numbers up to February and external debt data will be keenly watched by investors.

On technical levels, Nifty might slide further after it took a breather and corrected sharply on last Friday.

"Traders will need to watch, if the index can now hold above the immediate supports of 11,380; else a further correction is on the cards in the coming week," said Deepak Jasani, Head of Retail Research for HDFC Securities.

"On upmoves, 11,572 will prove to be a resistance."

(Rohit Vaid can be contacted at rohit.v@ians.in)

--IANS

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