Market forecast – What to expect this week?

Another uncertain weak awaits us. This uncertainty will bring volatility in Indian equity markets. US Federal Reserve quietly went for a lower 25 basis point hike last week. This happened only after a few days of US Federal Reserve Chairman Jerome Powell stating in his testimony before US Congress that maintaining interest rate hawkishness was necessary. The Federal Reserve, by going for a lower interest rate hike, has implicitly accepted the damage that its interest rate hawkishness has caused to the economy. Signature Bank, SVB, First Republic, Credit Suisse are some of the banks that have faced failures in the past 11 days. The risk of banking crisis spreading further saw Deutsche Bank’s stock price fall by more than 8% on Friday. Banking stocks in India are also likely to remain under selling pressure this week. 

Inflation in UK rose above expectations in February. On year-on-year basis, it stood at 10.4 % in the month. This once again shows the ineffectiveness of, increasing the interest rate for controlling inflation, policy that central banks are following. The current inflation surge is a supply side driven one. It has been caused by millions of supply chain disruptions because of two years of Covid lockdowns and restrictions. Supply side driven inflation cannot be controlled by raising interest rates. It is only demand side driven inflation that can be controlled by raising interest rates. Still, after the February inflation data came, Bank of England once again raised interest rates by 25 basis points. This in turn has increased the risk of UK’s economy slipping into recession. The country’s economy narrowly missed recession in the past few quarters.

On the technical front, support is seen for Nifty 50, this week, at 16800. Resistance is seen at 17300. The index is more likely to remain in the bearish territory this week. 

A Sell call is being given on the stock of Oberoi Realty for this week. Target price is Rs 805. Stop Loss is set at Rs 866. 

A Sell call is also being given on the stock of Jindal Steel for this week. Target price is Rs 505. Stop Loss is at Rs 550.