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Trade war fears, macro data, F&O expiry to steer market in the week ahead


NEW DELHI: The bulls on Dalal Street took a big hit on Friday after the US imposed tariffs on up to $60 billion of imports from China, spooking global investors over trade war fears and its consequences on the global economy.

The Sensex tumbled 410 points to shut shop at 32,596. The NSE Nifty slipped below its crucial level of 10,000 for the first time in 2018 to end at 9,998. On a weekly basis, the 30-share pack shed 1.7 per cent while NSE Nifty lost 2 per cent.

The coming week will be a truncated one, as the market will be shut on Thursday, March 29 on account of Mahavir Jayanti and Friday, March 30 on account of Good Friday.

Here are key events or developments that investors are likely to track next week:

Escalating trade war
Walking the talk, the US President Donald Trump on Thursday signed a memorandum ordering levies on up to $60 billion of imports from China, sending shockwaves to the financial markets across the globe. Reacting to it, China announced plans for reciprocal tariffs on $3 billion of imports from the US.

On Saturday, Chinese Vice-Premier Liu He told US Treasury Secretary Steven Mnuchin that the US had flouted trade rules with an inquiry into intellectual property and warned him that China will defend its interests, Reuters reported quoting Chinese state media. "China has already prepared, and has the strength, to defend its national interests," Liu said on Saturday.

Given the tit-for-tat, volatility is likely to increase in the coming days. Investors will keenly watch every move and development on the issue and take steps accordingly.

F&O expiry
Volatility is likely to continue next week as traders will roll over positions in the F&O segment from the near month March 2018 series to April 2018 series. The March 2018 F&O contracts will expire on Wednesday, 28 March 2018.

Fiscal deficit data
The fiscal deficit data for the period April 2017-February 2018 will be unveiled on Wednesday, March 28. The numbers for April-January period stands at 113.7 per cent of the target originally set for the fiscal year that ends in March. Finance Minister Arun Jaitley in his Budget speech for 2018-19 had revised the fiscal deficit target for the current year to 3.5 per cent of gross domestic product (GDP) from 3.2 per cent earlier.

Tech charts show bears have clear upper hand
The Nifty50 index on Friday formed a robust bear candle on the weekly chart and opened up doors for it to revisit the 9,800 level in the short term. Analysts believe the bears have a clear upper hand, as each pullback attempt has been met with strong resistance.

Sameet Chavan of Angel Broking said that given the next week is an truncated expiry week, 10,060-10,110 would pose as a strong hurdle and any bounce towards this resistance zone is likely to get sold into.

"The number of momentum indicators on various time frames are in sync with bearish price action and are suggesting that the fall is far from over," said Ratnaparkhi, Senior Technical Analyst, Sharekhan.

Lemon Tree IPO to hit D-Street on March 26
Hospitality chain Lemon Tree Hotels will launch its Rs 1,040 crore IPO on Monday, March 26. The public offer comprises sale of up to 185,479,400 shares by the existing shareholders, including Maplewood, Whispering Resorts, Palms International and RJ Corp. The price band of the issue has been fixed between Rs 54 and Rs 56 per share. On Friday, the company raised Rs 311 crore by selling 55,643,820 equity shares to the anchor investors.

Bandhan Bank listing
Private lender Bandhan Bank will debut on the bourses on March 27. The bank's IPO, which concluded last week, was well received by the investors, as the offer got 14.61 times subscription.

The bank raised Rs 4,473 crore from the IPO, primarily to increase capital base and allow part exit of one of its existing shareholders IFC. Incorporated on December 23, 2014, the lender started its operations on August 23 in 2015. It offers a variety of asset and liability products and services designed for micro and general banking as well as a banking portfolio to generate non-interest income.

Select auto firms may hog limelight
The government will give incentives to battery makers to set up more manufacturing units as it looks to intensify the promotion of electric vehicles, the ministry for renewable energy said on Friday. Renewable Energy Minister RK Singh held talks with battery manufacturers and asked them to set up units in India, assuring them the government would give incentives to the sector, said a Reuters report. Electric vehicles push is likely to benefit automakers such as Tata Motors and Mahindra and Mahindra.

Oil prices
Crude prices rose on Friday, hitting their highest since late January after the Saudi energy minister said Opec and allied producers would need to keep coordinating supply cuts into 2019, and as concerns grew over the future of Iranian crude exports.
Brent crude futures jumped $1.54, or 2.2 per cent, to settle at $70.45 a barrel. For the week, Brent was up about 6.4 per cent, its strongest weekly rise since July. US West Texas Intermediate (WTI) crude futures also had their biggest weekly gain since July, at 5.5 per cent. WTI settled at $65.88 a barrel, up $1.58, or 2.5 per cent, Reuters reported.

Other global cues
The final US GDP data for fourth quarter is scheduled to release on Wednesday, March 28. The US economy advanced an annualized 2.5 per cent on quarter in the last three months of 2017, below an advance reading of 2.6 per cent and 3.2 per cent in the previous period. This apart, UK's final Q4 gross domestic product (GDP) data will be declared on Thursday, March 29 2018.

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