Stock Market: Investors' Guide - These 5 factors will drive Sensex, Nifty and the entire Dalal Street this week
After a huge rally last week in Nifty and Bank Nifty, some profit booking or consolidation is expected, and we will see more stock specific actions next week.
Taking a cue from the global sentiments and dollar gaining against major global currencies, the Indian indices witnessed huge rally as FII continue to show faith in India and the Indian markets. The index Nifty Bank rose to its all-time high and broke the 29,000 levels and sustained above it on the weekend. Hence, the Indian equity market experts are expecting some profit booking before some major actions taking place this week that can give further bull or bear run on Dalal Street. Here are the top five major factors that are expected to have its impact on the Indian indices:
1] Opinion Polls / Election updates: 2019 Loksabha Election is going to be the major event for the equity market for the next 8-9 weeks. As per the latest opinion polls conducted and published last week, BJP led NDA is expected to get a majority in coming Lok Sabha polls.
Speaking on the Lok Sabha poll result's connection with the Indian markets Anindya Banerjee, Analyst, Kotak Securities told Zee Business online, "Much depends on the Lok Sabha election results as a victory of Modi would mean continuity of the government policies and hence the investor's sentiments. Similarly, if the result is fractured then it would have its toll on the markets and so does the opinion polls."
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Prakash Pandey, Director & Head of Research at Fairwealth Group said, "The hope of Modi coming back to power is helping Indian stock market and Nifty has already rallied 750 points after Balakot Airstrike. After a huge rally on the Nifty this week we see the range of 11,300-11,580 on the Nifty."
2] FIIs fund Flow: FIIs bought Equity worth Rs 14100 crores in the Indian market last week. This is the record number, the same kind of number we witnessed in 2014 (Pre-Election rally), it means that FIIs are betting big on Modi. FIIs are also betting big in F&O markets they are buying Nifty/Bank Nifty futures and their calls.
Prakash Pandey, Director & Head of Research at Fairwealth Group said, "Next week we have to see FIIs flows and their trading action closely, we see some reduction in flows next week, but as per my view they will remain net buyer in cash segments."
3] Nifty/Bank Nifty Technical setup: Nifty/Bank Nifty gave a huge breakout of daily charts last week and Bank Nifty rallied more than 1500 points after that breakout. The index remains grossly overbought on the daily chart, despite the liquidity chasing the markets, will be unhealthy if it comes without any consolidation/Correction.
Nifty put/call ratio is trading in the range of 1.70-1.80 (Indicating overbought positions in Nifty). Nifty (28th March Expiry), Nifty 11,500 call & 11,000 put having highest open interest. It also indicates that around 11500 Nifty will face resistance.
4] Stronger Rupee: Rupee is holding strong ground against, Rupee rallied almost 7-8% in last few months and that really helping Indian Bond markets, Banks and overall economic outlook. rupee is giving additional gains to FIIs and that is really helping the Indian markets to get huge FIIs flow. But After 7-8% we see rupee in the range of 69-70.80 next week.
5] Global Markets & Crude oil prices: We have to see the mother market closely ( USA stock market closely ), last week USA markets also rallied and this week we have to see whether this momentum holds next week or not. Brent crude is trading near $67/Barrel, above $60 it’s a not a great news for India.
Prakash Pandey, Director & Head of Research at Fairwealth Group said, "Higher crude prices always have an impact on India, because we are one of the biggest of crude oil, if crude prices $70, we may see some profit booking/correction in markets."
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