Week Ahead

The beginning of Ukraine invasion by Russia and rising oil prices dampened market sentiment in the week ended February 25, though benchmark indices showed smart recovery of 2.5 percent following positive global cues on Friday. The correction was across the board with sectors falling between two and five percent.

The BSE Sensex plunged 1,974 points or 3.41 percent to 55,858 and the Nifty50 fell 3.6 percent or 618 points to 16,658 during the week while broader markets Nifty Midcap 100 and Smallcap 100 declined 3.4 and 5.3 percent respectively.

The attack on Ukraine intensified selling by foreign institutional investors (FII) spurred by expectations of a faster US Federal Reserve tightening. Analysts largely expect six to seven rate hikes by the Fed in the coming year.

FIIs have net sold Rs 19,843 crore worth of shares in the passing week, taking the monthly outflow to Rs 41,771.60 crore, the highest since March 2020. With this, the total outflow stood at more than Rs 1.84 lakh crore in just five consecutive months since October 2021.

On the other hand, domestic institutional investors have managed to compensate the FII outflow by buying Rs 21,512 crore worth of shares during the week. Their net buying during the current month stood at Rs 37,941 crore.

Technically Nifty50 formed a bullish candle on daily charts on Friday as the index gained 2.5 percent at 16,658 but for the week there was a bearish candle formation on the weekly scale indicating nervousness at Dalal Street.

Also the benchmark index is still under its 200-day exponential moving average of around 16,700-16,800, which is a key concern though the market recovered sharply on Friday. Experts feel the index needs to clear this hurdle (16,700-16,800) before the 17,000 mark which could give strength to bulls, whereas the recent low of 16,200 could be the major support.

Option data clearly indicates that the Nifty50 could remain in a wider trading range of 16,000-17,000 in coming days or till the market gets sense of easing geopolitical tensions, and sustainability above 16,800-17,000 levels is going to be crucial for further upward direction with strong support at 16,200-16,000.