Short trading week to witness market consolidation

This week is a short trading week as Indian markets will be closed on Monday (Holi) and Friday (Good Friday). We expect markets to consolidate at higher levels amidst the derivatives' monthly expiry and several global cues. Focus would be on both domestic and global events. Key numbers like United States' gross domestic product, new home sales, consumer confidence data, and Japan inflation numbers, will keep investors busy.

Domestic markets recovered last week after witnessing intense selling in previous sessions. Sentiments got a boost after the Federal Reserve kept interest rates unchanged for the fifth time and signalled that it might cut rates three times this calendar year. It also increased the US growth outlook for 2024 to 2.1 per cent from 1.4 per cent earlier.

On the domestic front, Moody raised India's growth forecast to 8 per cent from 6.6 per cent for FY24 on the back of strong domestic consumption and high government expenditure. S&P Global Market Intelligence too revised its forecast for India's growth to 6.8 per cent for FY25.

Last week, Nifty, after witnessing initial pressure, recovered towards the end to close flat with positive bias at 22,097 levels. The broader market too witnessed smart recovery with both Midcap100 and Smallcap100 up more than 1 per cent each. Except for IT and FMCG, all other sectors ended in green. Realty, Metals, and Auto gained 4-5 per cent.

The Election Commission announced dates for the 18th general elections, which will be carried out in seven phases starting on April 19, with the results to be declared on June 4. Thus, focus is soon likely to shift to domestic cues.

On the global front, major central banks had their policy meetings last week. While the US, United Kingdom, and China kept interest rates unchanged in line with market expectations, Japan raised rates for the first time in 17 years from -0.1 per cent to a range of 0 per cent-0.1 per cent. The Swiss National Bank cut its main interest rate by 25 basis points to 1.50 per cent, a surprise move that made it the first major central bank to cut rates. 

On the economic data front, China's industrial output went up 7 per cent in January and February. The euro area's annual inflation rate was 2.6 per cent in February 2024, down from 2.8 per cent in January, and the Eurozone monthly trade surplus rose to a record high. UK inflation cooled down slightly more than expected to 3.4 per cent in February, an 18-month low. US S&P Global manufacturing PMI improved to 52.5, thus, indicating economies across the globe are showing signs of recovery.

(The writer is Head – Retail Research, Motilal Oswal Financial Services Ltd)