Sensex | Clever 50 | Market Insight: Inflation, Ukraine crisis and FOMC minutes among key factors likely to drive market this week

New Delhi: Following the rebound in equities during the fiscal week, domestic stock markets resumed selling pressure in the previous week on the back of RBI announcements, rising inflation, rate hikes from the Faster-than-expected Fed and intense FII outflows.

Over the past week, the two benchmarks – BSE Sensex and Nifty50 – have fallen around 1% each, followed by a 2% drop in the mid-cap index and a 3% drop in the index. small cap peers.

Ajit Mishra, VP of Research, Religare Broking, said markets were volatile and down nearly one percent, continuing the ongoing consolidation phase.

“After a weak start, the RBI’s dovish stance boosted sentiment in the middle; however, news of US inflation hitting a 4-decade high soured the mood again,” he added.

Markets have consolidated over the past four months and still offer no indication of the next directional move. Global signals, including inflation fears and Russian-Ukrainian tensions, are currently weighing on sentiment.

“Market direction in the coming week will be determined by global market indices, while domestic macro data and corporate earnings will remain the focus of near-term focus,” said Vinod Nair, head of research at Geojit Financial Services.

Here are the key factors traders should keep an eye on:

Domestic inflation figures

India will release its wholesale and consumer price inflation data for January on Monday, which will be a key factor in driving markets forward. After RBI’s dovish commentary last week, despite growing inflation concerns globally, market participants will be watching India’s rising prices closely.

Inflation concerns

Rising inflation concerns across the globe spooked market participants. The United States has recorded the highest inflation in more than four decades, suggesting faster-than-expected rate hikes from the Federal Reserve. Other central banks have also pinned monetary policy tightening in the coming days on rising inflation.

Geopolitical tensions

The current crisis between Russia and Ukraine is weighing on global sentiment. Amid a new warning from the United States that Russian forces could invade Ukraine “any day now”, the simmering tension around the Russian-Ukrainian conflict has intensified.

Efforts to defuse the crisis in Ukraine via a frenzy of telephone diplomacy failed to ease tensions on Saturday, with the White House insisting that Russia faces “swift and severe costs” if its troops proceed to an invasion.

FOMC Meeting Minutes

Minutes of the Federal Open Market Committee (FOMC) meeting will be released on Thursday, it was held a few weeks earlier, with a detailed account of inflation concerns.

The minutes will offer detailed insights regarding the FOMC’s stance on monetary policy. Traders therefore watch them carefully for clues about the outcome of future interest rate decisions.

India Inc third quarter results

India Inc enters the final leg of earnings for the quarter ended December 2021 amid volatility in broader markets. However, except for a few names, India Inc has not reported any major positive surprises so far.

Major companies such as Adani Enterprises, Grasim, Coal India, Nestle, Eitcher Motors, Ambuja Cements, Adani Wilmar, R Systems International and Huhtamaki India will announce their results along with several others in the coming week.

Technical outlook

Nifty 50 ended the week on a negative note and continued to consolidate in a tight range. In line with recent weeks, also this week the index faced strong resistance and failed to hold above its 20 DMA and is now in the 17,050-17,800 range, a said Yesha Shah, head of equity research, Samco Securities.

“A decisive break of this range is likely to define the next course of action. Most global indices are also showing a bearish undertone. We therefore suggest traders maintain a neutral outlook and create new long positions only on the dips or around immediate support levels,” she added.

Christi C. Elwood