In the week ending February 16, the market exhibited resilience, recovering over 1% and nearing its record high despite uncertainties surrounding the rate cut cycle and net FII outflow. Key drivers included a favorable conclusion to Q3FY24 earnings, declining inflation, and robust buying across pivotal sectors like banks, technology, oil & gas, energy, and auto. Anticipation of a pre-election rally further fueled positive sentiments, as indicated by pre-poll surveys.
Looking ahead to the upcoming week, experts project the continuation of positive momentum, albeit with intermittent consolidation and corrections. Attention will be focused on crucial takeaways from FOMC and MPC policies, US bond yields, and global cues. The BSE Sensex surged 1.16% to 72,427, and the Nifty 50 saw a 1.19% jump to 22,041. While the Nifty Midcap 100 index gained 0.5%, the Smallcap 100 index experienced a slight dip of 0.5%.
Market sentiment is expected to strengthen further, particularly with prospects of a robust pre-election rally. Notably, pre-poll surveys by India Today and Times Now suggest a comfortable majority (272+ seats) for the incumbent BJP-led NDA. Analysts anticipate the Nifty to reach new highs in the week starting February 19.
Globally, market participants eagerly await insights from FOMC minutes scheduled for release on February 22. Mixed opinions from economists about the initiation of the Fed funds rate cut trajectory add to the anticipation. Attention will also be on key speeches by various Fed officials, manufacturing & services PMI flash numbers, US jobs data, and Europe’s January inflation.
Domestically, the RBI policy meeting minutes on February 22 will be closely monitored for any cues about a potential shift in policy stance. The RBI, having maintained the repo rate at 6.5% for a sixth consecutive meeting, remains focused on achieving a sustainable 4% inflation target. Key releases include HSBC Manufacturing & Services PMI Flash for February and bank loan and deposit growth for the fortnight ending February 9.
On the listing front, Wise Travel India is set to debut on February 19. Additionally, IPO activities continue with Juniper Hotels, GPT Healthcare, and Vibhor Steel Tubes. In the SME segment, Zenith Drugs IPO, Deem Roll Tech, and Sadhav Shipping are scheduled for subscription.
Technically, the Nifty 50 exhibits strength, sustaining an uptrend and closing above 22,000 for the first time on a weekly basis. The record high of 22,126 is a crucial level for further upward movement, with immediate support at 21,950 and a significant level at 21,500. Analysts emphasize the importance of the initial sessions of the coming week to gauge market reactions around the 22,100 – 22,150 zone.
Options data suggest that 22,000 is a pivotal point for further direction, with immediate resistance at 22,100 and 22,300, and support at 21,900. The India VIX, closing below 16.5, offers comfort to bulls, and any crossing of this level may introduce increased volatility, making bulls uneasy.
