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Macro data, Brexit, crude among 6 factors that may chart market direction this week

D-Street may witness bouts of volatility as March series F&O contracts expire on Thursday.

Updated: Mar 24, 2019, 11.06 AM IST
NEW DELHI: The market-boosting US Fed interest rate decision, development around Brexit deal and a stronger rupee against the US dollar augured well for Indian equity market last week.

Even though the eight-day winning streak in equity benchmark Sensex halted on Friday, the benchmark index logged gains on a weekly basis. The Sensex edged up 140 points or 0.37 per cent, while Nifty50 advanced 30 points or 0.26 per cent.

The market is keeping a close eye on heightened political activities in the run-up to general elections. Besides, F&O expiry, global sentiment, FPI inflow and macroeconomic numbers are the factors that will influence the mood of the market in the coming week.

Let's take a look at some factors that will sway market mood during the coming week:

F&O expiry
The domestic stock market may witness bouts of volatility as March series futures & options contracts expire on Thursday, and investors roll over positions to April series. Nifty futures closed in the negative at 11,478 with a loss of 0.65 per cent on Friday. On the options front, maximum Put open interest was at strike price 11,000 followed by 11,200 while maximum Call OI was at 11,600 followed by 11,500. There was Put writing at 11,600 followed by 11,450 levels, while meaningful Call writing was seen at 11,600 followed by 11,500 levels.

Macroeconomic prints
Two important sets of data will reveal the health of India's economy in the coming week. The fiscal deficit data and infrastructure output data for the month of February will be released on Friday. The eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- grew slenderly by 1.8 per cent in January because of decline in output of crude oil, refinery products and electricity. Besides, the country's fourth-quarter data for foreign debt and current account data are also important numbers that will catch the attention of the market.

A new round of US-China talks
A fresh round of high-level trade talks will begin between the US and China on Thursday. Both the countries have shown their keen intent to resolve their trade-related differences of late and the new round of talks is a step in that direction. A trade truce after a dovish Fed- do emerging markets need anything else?

The Brexit saga is getting intriguing. After getting a two-week reprieve from the European Union, British Prime Minister Theresa May has to accomplish a daunting task- to get her Brexit deal cleared by the British Parliament, which has been defeated twice. As per Reuters, she is expected to make another attempt soon and if the deal still fails, several possibilities open up, from a no-deal Brexit to Brextension and even exit from Brexit. Meanwhile, over 1 million people marched through central London on Saturday to demand a new referendum on Brexit.

Crude's course
Crude oil prices fell about 2 per cent on Friday, dragged by concerns of a global economic slowdown and oil demand. Oil prices have a direct relation with India’s fiscal math, as the nation is a major importer of crude oil. The domestic market may see some capital inflow if the fall in crude oil prices continues.

Technical outlook
On Friday, the Nifty index formed a bearish candle for the second straight session, which resulted in a Doji kind of indecisive formation on the weekly chart. A Doji formation on the weekly chart reflected fatigue at higher levels, and indicated some slowdown in momentum. The Relative Strength index (RSI) has turned south from extreme overbought levels of 80, suggesting a transitional pause or correction.

Also Read

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UK destined for Brexit as election triumph looms for Johnson

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UK's Johnson promises Brexit for Christmas in manifesto

EU lawmaker backs 3-month Brexit extension

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