Weekly Market Wrap: D-street ends in deep red amid rising geopolitical tension. What lies ahead? 

Indian equity benchmarks ended the passing week with a cut of over one and half a percent amid the escalating tension between Israel and Iran which has increased in the past few weeks, dampening global markets sentiments.

Also, India’s wholesale price index (WPI)-based inflation accelerated to 0.53 per cent in March on an annual basis, as against 0.20 per cent in February. Besides, Crude oil prices jumped on signs of escalating tensions in the Middle East, weighted down on the domestic sentiments.

These negative signals led the BSE Sensex to fall 1157 points, or 1.56%, at 73,088.33 during the holiday shortened week ended on April 19, 2024. While the Nifty50 declined 372 points, or 1.65%, to 22,147. 

Nifty outlook: According to Rupak De, Senior Technical Analyst at LKP Securities, on the daily chart, a piercing line pattern has formed, often indicating a bullish reversal following a correction. Additionally, the indicator has surpassed the 55EMA, a short-term moving average. A close above this moving average signifies a positive short-term trend. “Looking ahead, bulls may drive the Nifty's recovery towards 22,300. Furthermore, a decisive breakthrough above 22,300 could trigger a sustained rally towards 22,600. On the downside, support on a closing basis is situated at 22,000”, De said.

Sector-wise, all major indices in BSE ended in the negative zone during the week gone by. The BSE Information Technology index declined the most (4.6%) during the week. While BSE Realty index registered a loss of 2.8% followed by BSE Healthcare, which slipped 2.4%.  

Only 10 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 5.2%, Bharti Airtel emerged as the top gainer in the index. It was followed by Oil & Natural Gas Corporation up (3.6%), Maruti Suzuki India (3.6%), Hindalco Industries (2.8%), and Power Grid Corporation of India (2.4%).  On the other hand, Tata Motors, Hero MotoCorp, and Infosys declined 5.4%, 5.1%, and 4.9%, respectively. 

Market Macros: Vinod Nair, Head of Research at Geojit Financial Services says, "Indian markets staged a recovery as the week drew to a close, fuelled by strong performances in large cap amid global uncertainties”. Optimism prevailed with hopes of limited prospects of escalation in Iran-Israel tensions. However, the domestic market failed to offset the losses sustained throughout the week.

Nair further added, that globally, caution persisted as the situation in the Middle East remains fragile. Further, the potential delay of a US rate cut due to higher-than-expected inflation, robust retail sales, and elevated oil prices invoked subdued sentiments. This was evident through notable upticks in the dollar index, US bond yields, and the price of yellow metal. Sectors like banking and IT witnessed profit booking. Mid- and small-cap stocks also corrected, highlighting concerns over premium valuations.

“Muted Q4 earnings expectations and weak IT results could extend the consolidation. FIIs continued to remain risk-averse, a trend seen since last week. Large caps could offer solace for investors, given earnings stability. GDP, PMI, and jobless claims data from the US next week will provide further insights into the Fed's policy. Additionally, Indian PMI data and Q4 results are anticipated to shape market trends in the coming week”, Nair said.