The stock markets displayed a volatile nature, with a continuation of the prevailing consolidation phase. However, they managed to edge higher by the end of the week. Both Nifty and Sensex gained over a percent each, settling at 22,040.70 and 72,426.64 levels, as investors focused on fundamentals and macroeconomic indicators. Sectors such as auto, IT, energy, and banking performed well, with BSE Midcap index closing almost 1% higher.
The broader indices oscillated sharply on both sides and eventually settled mixed, with the Q3 earning season coming to an end. Concerns regarding FPIs offloading ₹29,520 crore in Indian equities continued in February.
Looking ahead, a correction in PSU banks seems likely due to higher valuation risks. Meanwhile, sectors such as metals, FMCG, and capital goods are anticipated to gain momentum driven by robust construction demand, an order backlog, rural revival prospects, and India’s narrowing trade deficit.
The coming week will be crucial from the domestic and technical point of view as several new initial public offerings (IPO) and listings are scheduled across the mainboard and small-and-medium enterprises (SME) segments. Analysts maintain a positive yet cautious stance as Nifty 50 is set to retest its record high level, but there could be bouts of intra-day volatility.
In terms of global cues, investor expectations of a rate cut from the Fed were bolstered as US retail sales data declined. The US Federal Reserve will release its Federal Open Market Committee (FOMC) minutes-of-the-meeting this week, which will lend further cues towards the interest rates trajectory for global markets. Oil prices settled higher in the previous session as geopolitical tensions in the Middle East more than offset a forecast from the International Energy Agency (IEA) for slowing demand.
The markets will also react to major Indian macro data, FII mood, and other global cues as Nifty 50 eyes 22,150+ this week. FPIs continued to sell in the cash market, but buying through ‘the primary market and others’ reduced the net sell figure for February.
In conclusion, the markets are hopeful of a possible breakout attempt for Nifty 50 above 22,150, marking the resumption of the uptrend. However, experts advise participants to keep a close watch on the banking index and continue with a “buy on dips” approach and focus on stock selection.
