Several key events are scheduled in the coming week, including trade data from two major economies, RBI's interest rate decision, which could keep traders on tenterhooks, amid growing controversy over bearish Adani Group shares.
Analysts said investors across the globe would keenly watch the trade data numbers from the two major economies, US and UK, as they would decide the direction of global indices.
In addition, the Monetary Policy Committee (MPC) of RBI will meet centrally. D-Street expects a 25 basis points (bps) rate hike from the central bank and a conservative tone.
In the coming week, ICICI Direct expects Nifty to extend its consolidation in the 17300-18000 range with a "positive bias". The brokerage has advised investors to use the volatility during the week as a "buying opportunity".
"Going ahead, we see signs of lower-side support near 17300, with upside momentum to sustain above Budget day highs and 20-day EMA near 18000," ICICI Direct said in its report.
“Structurally, the index has retraced its 9-week rally from the September 2022 low to 61.8% in the past nine weeks, indicating the shallow nature of the retracement and the underlying strength. Use the dips to accumulate quality stocks from a medium term perspective."
From a volatility perspective, post-Budget, India's volatility index has eased substantially to 14.5, down 17% for the week, despite major index changes, the brokerage said.
It further added that the market is likely to stabilize near the current levels as the key events as well as the results of most of the index heavyweights are over.
ICICI Direct expects IT, BFSI, Auto, Infra to do relatively better in the coming week.
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"There will be several important events in the coming week. To begin with, we have balance of trade data from two major economies, US and UK. China will publish its MOM and Y-O-Y inflation data. Market Perspectives at SAMCO Securities The UK will also reveal GDP and three-month average GDP figures, said Apoorva Sheth, Head of Research.
“Back home, the outcome of the two-day meeting of the RBI MPC (during February 6-8) will take center stage. CPI inflation has remained below the RBI's tolerance band of 6% for two consecutive months," said Sheth. "Keeping in view the number of important events in the coming week, investors are advised to be cautious and prudent in their investments. Be judicious."
on FPI
Large-scale selling by foreign portfolio investors (FPIs) in Indian markets weighed on the market sentiment. So far, FPIs have sold a whopping ₹53,887 crore in the cash market in January, followed by ₹3,212 crore in February.
FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, "Indian markets have underperformed so far this year due to the strategy of 'short India and long other cheap markets'.
While China, Hong Kong and South Korea are up 4.71%, 7.52% and 11.45% respectively, YTD India is down 1.89%. "Such a poor performance is unlikely to last for long. There has also been a huge underperformance of FIIs in the derivatives market."
The chief investment strategist said, “The budget turned out to be better than expected. But the market could not hold on to the gains as Adani stock crisis hit sentiments. Banking stocks took a hit on fears that Adani exposure could hit banks. But the RBI's message that the Indian banking system is healthy has improved sentiment, which has led to a late rally in banking stocks."
Equity benchmarks Sensex and Nifty gained over 1 per cent each on Friday due to heavy buying in banking and financial counters amid a mixed trend in global markets.
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