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Fed outcome, Brexit talks & local cues to steer market in the coming week


NEW DELHI: Another week has gone by, and the bulls put up another dismal show.

The bears retained their command on Dalal Street as weak global and domestic cues kept investors on the back foot. Although the bulls showed some spark on Monday, the bears lost no time to reverse the course and defeat the former comprehensively.

The equity market witnessed frantic selloff on Friday, which dragged key indices 1.50 per cent lower. On a weekly basis, the S&P BSE Sensex lost 0.39 per cent to settle at 33,176 while the broader Nifty50 index of the National Stock Exchange (NSE) shed 0.30 per cent to close at 10,195.

Political uncertainties on both global and domestic fronts coupled with trade war jitters and Fed rate hike worries prevented investors from making fresh stock purchases.

Among key highlights, the IPO market was in full swing as four companies, namely Bharat Dynamics, Bandhan Bank, Hindustan Aeronautics and Karda Constructions, launching their issues. In the broader market, banking and metal packs were the volatile lot.

Let's have a look at the upcoming events/developments that investors will keep an eye on in the coming week –

US Fed rate-setting meet
The biggest trigger for the market next week will be the US Federal Reserve’s policy decision. Although, a 25bps rate hike by the US Fed is seen as a done deal, investors across the globe will look for hints on the pace of policy tightening. The market is expecting three rate hikes by the Fed this year. If they hike rates more aggressively, it will be a shock for the market, feel analysts. It will be the first policy meet of the US central bank headed by new Fed Chair Jerome Powell. The meeting is slated to be held on March 20 and 21 with a decision due on March 21.

Tech charts signal more pain
The Nifty50 index on Friday formed a Bearish Belt Hold candle on the daily chart and corrected around 165 points to 10,195. “The upside looks capped in 10,400-10,500 zone with a crucial hurdle at 10,631. In terms of Elliott Wave Theory, the index is forming wave extension on the downside for which 10,000 and 9,800 will be the targets to watch out for,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

Milan Vaishnav CMT MSTA expects more intermittent selling bouts but sees rock solid support in the 10,040-10,160 zone. "We do not expect this support zone to be easily and comprehensively broken. On the upside, the Nifty faces resistance at 10,300 and 10,390 levels," he writes.

Three IPOs to hit Street
It's going to be another busy week for the IPO mart as three issues are lined up for launch. Auto component maker Sandhar Technologies is scheduled to hit the market on Monday, March 19. On Friday, the company raised Rs 154 crore from anchor investors. The price band for the offer, which will close on March 21, has been fixed at Rs 327-332 per equity share. At the upper end of the price band, the issue will raise Rs 513 crore.

This apart, state-owned steel company Mishra Dhatu Nigam's issue will hit Street on March 21 to raise Rs 438.4 crore.

The much-talked about IPO of ICICI Securities will open for subscription on March 22 to raise an estimated Rs 4,000 crore. ICICI Securities is a subsidiary of private sector lender ICICI Bank. The price band of the offer, which will close on March 26, has been fixed at Rs 519 to Rs 520 per equity share.

Brexit Summit
Britain and the European Union could agree a “provisional” deal next week on a post-Brexit transition period; Reuters reported quoting a senior Brussels diplomat. The diplmat stressed that the deal will only happen if London and the bloc resolve all divorce matters first. British Prime Minister Theresa May will attend an EU summit next Thursday and Friday, and is hoping for a deal that will reassure business that not much will change for about two years after Britain leaves the bloc as scheduled in March 2019, the report added.

Bank of England policy meet
The BoE is expected to keep rates on hold when it announces policy decision on Thursday, March 22. Last week, the bank warned that regulators and politicians in the UK and EU were not doing enough to prevent “material risks” hanging over the 26 trillion pound derivatives market after Brexit, even if a transition deal is agreed, The Financial Times reported.

Stocks in focus
State Bank of India (SBI) on Friday sold 22 lakh shares or 4.4 per cent stake in Clearing Corporation of India (CCIL). Post this transaction, SBI holds 16.80 per cent stake in CCIL. The stock on Friday settled 0.59 per cent lower at Rs 252 apiece on BSE. Private lender YES Bank is likely to consider fund-raising on or after March 21. Shares of the bank closed flat at Rs 313, up .16 per cent on Friday.

This apart, rupee movement against the dollar, crude oil price movement, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will steer the market next week.

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