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Profit booking to spark volatility in equity indices (Market Outlook)

IANS  |  Mumbai 

Short-term may persist in key Indian equity indices, as profit booking dents investors' risk-taking appetite during the upcoming trade week, market observers said.

However, on a weekly basis, the key equity indices are expected to rise further on the back of a dovish and strong economic macros.

Additionally, other factors like inflow of foreign funds and a strengthened rupee are expected to buoy investors' sentiments.

"Large cap indices may take a breather to enter consolidation and the mid and small cap stocks are likely to rise in the coming sessions," said Sahil Kapoor, Chief Market Strategist-Research, Edelweiss Wealth Management.

"NSE small cap index has formed a double bottom which should be the focus area for the next few weeks."

Last week, domestic market touched fresh six-month high as and financial services sector drove the pre-election rally.

"Reduced geopolitical tension, an expectation of a stable government post election, strengthening rupee and the recent FII buying activities boosted the sentiments of the investors," said D.K. Aggarwal, Chairman and Managing Director, and

"Nifty is expected to move in the range of 11,300-11,500 points, while nifty is expected to move in the range of 28,800- 29,600."

According to Vinod Nair, of Research at Geojit Financial Services: "Probability of a stable government formation at the center and the inflation being continuously below the RBI's target has increased the scope for rate cut in the near term."

"Minor profit booking is expected, given sharp run-up in domestic markets and global factors. However, downside will be capped as emerging markets like are likely to benefit from strong liquidity and reversal in FII flows."

Besides the meet on March 19-20, investors are expected to keep a close watch on the direction of foreign fund flows and the rupee's movement against the US dollar.

On a weekly basis, the rupee strengthened by Rs 1.75 to close at Rs 69.10 against the US dollar from its previous week's close at Rs 70.85.

"Rupee closed at 69.10 after a appreciating spree on account of stupendous flows in equity markets...," said Sajal Gupta, Forex and Rates,

"RBI swap announcement also did little to stem the appreciation. RBI may keep on buying in spot markets to ease the appreciation pressure and provide rupee liquidity in the market."

"The rupee is expected to range between 68.50 and 69.30."

On the front, provisional figures showed that so far during March foreign institutional investors (FIIs) bought stocks worth Rs 17,055 crore.

On technical levels, the National Stock Exchange's (NSE) Nifty50's underlying trend remains bullish.

"Technically, with the Nifty breaking out of a 4 month trading range, the underlying bias has turned bullish," said Deepak Jasani, of Retail Research for

"However, given the sharp rally seen recently, markets could witness a minor correction or consolidate in a range for the near term."

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, March 17 2019. 11:52 IST