Election results, rupee to guide equities markets

Crucial state election results, combined with upcoming macro-economic industrial production data and cues on a likely US interest rate hike will determine the movement of the equities indices in the week beginning on Monday.

"The coming week for the markets will be largely dominated by global sentiments especially the US markets and the domestic flows which have been gaining prominence in the recent times," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

According to Nevgi, the defining moment for next week will be the declaration of assembly election results in five states -- Uttar Pradesh, Goa, Manipur, Uttarakhand and Punjab -- on March 11.

Besides, there is caution on a likely US interest rate hike during the upcoming US Federal Open Market Committee (FOMC) meet.

A hike in the US interest rates can potentially drive away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

"Though a 25 basis points (US) hike is already in the prices. The future path of rates remains more important," Nevgi said.

The upcoming Industrial Production (IIP) for January will be the other major theme for the markets, pointed out Dhruv Desai, Director and Chief Operating Officer of Tradebulls.

"Investors will also closely follow the domestic macro-economic data point of industrial production and price movement of Indian rupee against US dollar," Desai said.

On the currency front, the Indian rupee had closed on a flat-to-positive note last week with a minimal gain of two paise at 66.81 against a US dollar.

"Indian equity markets are likely to be volatile due to profit booking at higher levels," Desai added.

On technical levels experts asserted that even though the NSE Nifty has dipped the overall trend remains bullish.

"The intermediate trend nevertheless remains firmly up and it will be important that any further correction does not lead to the Nifty supports of 8,712 points being broken in the coming week," Deepak Jasani, Head - Retail Research, HDFC Securities, explained.

"On the upside, 8,993 points needs to be crossed for the intermediate uptrend to resume."

Last week, the domestic equities markets slipped on the back of profit booking which was triggered after five-weeks of a bull streak. The key indices closed on a flat-to-negative note, as investors' risk taking appetite got eroded due to a likely US interest rate hike.

Consequently, the barometer 30-scrip Sensitive Index (Sensex) of the BSE edged lower by 60.52 points or 0.20 per cent to close at 28,832.45 points.

The wider 51-scrip Nifty of the National Stock Exchange (NSE) slipped by 41.95 points or 0.47 per cent to 8,897.55 points.

By Rohit Vaid

(Rohit Vaid can be contacted at [email protected])