Is the worst over for the markets?

Markets have staged a strong rebound after frontline indices Nifty 50 and S&P BSE Sensex hit bottom on March 7. With benchmarks recovering 10 per cent since March 7, what has changed in the past three weeks?
 
The Ukraine war, which led to dampening of investor sentiment, has still not reached a peaceful resolution. However, US President Joe Biden’s largest-ever release from the US Strategic Petroleum Reserve has calmed the oil markets from multi-year highs.

Lower crude prices coupled with Russia’s offer of discounted crude oil prices at $35 a barrel to India are insulting markets from the worst.
 
Apart from that, analysts see in-line fourth quarter earnings for FY22 help retreat investors’ sentiment.
 
Large part of the sell-off in India was driven by massive FII selling since October last year. However, analysts believe that the worst FII outflows have peaked for Indian markets.
Neeraj Chadawar of Axis Securities, for instance, expects FII inflows to resume in the next two months as valuations seem favourable. 

To sum it up, panic among investors seems to be easing but the markets may not be completely out of the woods.
The near-to-medium term sentiment will continue to remain volatile as the Ukraine-Russia crisis is yet to reach a definite solution and supply-shortage induced inflation is yet to peak.

That said, this week’s market trajectory will be guided by a host of domestic and global economic data points.
 
India will release its manufacturing PMI data for March on April 4 and Services PMI on April 6.
Globally, Euro zone, UK, USA and Russia will roll out their respective Composite and Services PMI data for March on April 5.
Moreover, Euro zone’s retail sales for March are due to be released on April 7, and Russia’s Q4FY22 GDP data will be released on April 8.
Lastly, the Reserve Bank of India will announce its interest rate decision on April 8.

Shivam Bajaj of Avener Capital believes that the central bank will maintain status quo and focus on growth at the upcoming Monetary Policy Committee meeting. 

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