Week Ahead: Waiting for global triggers

MACRO TECHNICALS

A truncated week began with a massive fall on Monday and ended with a weak recovery on Wednesday.

The Nifty ended the week at 4,573.95 points, down by 4.14 per cent, while the Sensex was down by 4.86 per cent at 14,904 points. The Defty lost 3.81 per cent with the rupee moving up after the US Federal Reserve rate cut. Both foreign institutional investors (FIIs) and domestic funds were net sellers.

Breadth remained poor with declines far outnumbering advances and volumes were extremely thin. Indices of smaller stocks did worse than the Nifty-Sensex.

The Junior was down 9.48 per cent, the Midcaps was down 8.2 per cent but the BSE 500 was up 1.5 per cent. The Bank Nifty lost 9.14 per cent. The CNX IT index was comparatively less affected, despite the stronger rupee, losing only 0.85 per cent.

Outlook: By breaking support at 4,600, the market signalled that it could drop quite a bit more. The 4,500 support held and upside resistance was visible at 4,750. Next week will see a lot of daily volatility and the index may swing between 4,500-4,800. Breakouts will depend on global triggers.

Rationale: As this is being written on March 20, there are two extra sessions in the US where the impact of the latest Fed cut may cause a revival. Plus the local futures and options (F&O) settlement will guarantee daily volatility