Market outlook for the week (03-Mar to 07-Mar)

4 Mar 2025 , 09:52 AM

SECTORAL STORY FOR THE WEEK TO FEBRUARY 28, 2025

The week to February 28, 2025 saw Nifty and Sensex correcting by -2.94% and -2.81% respectively. During the week, FPIs were net sellers of $(1,253) Million in Indian equities, but negative sentiments are getting deeper. Here are the 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (28-Feb)	Index (21-Feb)
Nifty Private Banks	-1.03%	24,225.15	24,476.90
Nifty Banks	-1.30%	48,344.70	48,981.20
Nifty FMCG	-2.70%	50,689.00	52,098.15
Nifty Consumer Durables	-2.91%	34,458.85	35,489.90
Nifty Healthcare	-3.29%	12,685.50	13,117.40
Nifty MNC	-3.63%	24,934.40	25,873.05
Nifty Non-Banks	-3.77%	24,291.95	25,244.10
Nifty India Defence	-4.06%	5,131.80	5,349.00
Nifty Mobility	-4.24%	17,413.00	18,184.45
Nifty Infrastructure	-4.28%	7,665.55	8,008.45
Nifty Metals	-4.54%	8,219.25	8,609.70
Nifty CPSE	-4.64%	5,387.30	5,649.50
Nifty Automobiles	-4.68%	20,498.60	21,505.90
Nifty Oil & Gas	-4.80%	9,590.60	10,074.20
Nifty Energy	-4.98%	30,018.15	31,592.00
Nifty PSU Banks	-5.33%	5,652.10	5,970.60
Nifty Realty	-5.52%	797.90	844.50
Nifty India Digital	-6.91%	8,076.40	8,675.65
Nifty IT	-7.96%	37,318.30	40,544.50
Nifty Capital Markets	-9.44%	3,091.05	3,413.35

Data Source: NSE

Here are key takeaways from weekly sectoral returns.

• Out of 20 sectoral indices, all the 20 sectors gave negative returns. Sectors that showed relative strength included private banks and FMCG; although it was the strength in private banks that prevented the Nifty from a free fall in the week.
• Of the 20 sectors contracting this week; Capital Markets, IT, Digital, Realty, and PSU Banks were the worst hit. For the IT space, the concerns are on US demand stability, while domestic consumption story remains a question mark.
• For the week, the arithmetic average of returns of the 20 sectors stood at -4.50%. The bottom 10 sectors delivered -5.88%, while top-10 delivered -3.12%. There were 13 sectors falling more than 4%; of which 5 sectors corrected over 5% in the week.

Nifty VIX sobered marginally to 13.49 levels. However, with the volumes dwindling sharply, the VIX itself may not have much of analytical value.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

What decided the market move last week? Let us look at the positive triggers first. Firstly, the GDP data came in slightly better than expected. The Q3 real GDP growth at 6.2% was sequentially better by 60 bps, while the full year projection of 6.5% GDP growth is still pre-supposing 7.5% growth in Q4. Secondly, core sector growth was robust at 4.6%, led by refinery products; while the oil prices in the Brent market remained subdued at $72/bbl. The US PCE inflation at 2.5% also gives the RBI enough breathing room.

Let us turn to the negative swing factors in the week. The breakdown in the US-Ukraine peace talks is negative for global stability. We could see alternate power centres come up in Europe, which is likely to keep the global economy volatile. The fiscal deficit as of January 2025 also showed signs of crossing 4.8% of GDP for FY25. Also, Trump has clarified he will drive a hard bargain with India and would seek access to Indian markets, despite reciprocal tariffs. Also, if the EU goes back to buying Russian oil, then India loses price leverage.

STOCK MARKET TRIGGERS FOR COMING WEEK TO MARCH 07, 2025

Here are key triggers that could influence stock markets next week.

• For the coming week, the big domestic data points will be the composite PMI data and the auto numbers; apart from the sectoral mix of FPI flows. The FPIs have sold heavily in IT stocks in February. Also, while manufacturing PMI is expected to be static, the services PMI is likely to improve. One can expect positive outcomes of GDP and core sector data.
• The two major data points in focus will be the crude prices and the USDINR equation. With the state of flux in Ukraine, one can expect the oil prices to remain subdued, even going below $70/bbl, till there is clarity on Russian oil supply. The rupee continues to be under pressure, weakening sharply last week, and this weakness could continue.
• In terms of global data flows, the big focus area would be the ECB monetary policy announcement and the US unemployment data. US jobless rate is likely to be stable at 4.0%, although the real focus will be on the non-farm payrolls addition. Markets will be watching the aftermath of the fallout between Trump and Zelensky last week.
• Key global data points. PMI, ISM, Atlanta Fed GDP, Fed Speak, Crude Oil EIA Inventories, factory orders, jobless claims, trade deficit (US). Composite PMI, Trade, CPI, PPI (China); Monetary Policy, PMI, CPI, GDP (EU); PMI, Capex (Japan); PMI (UK).

What does this mean for Nifty and Sensex in the coming week to March 03, 2025.

PARTING THOUGHTS ON MARKET INDEX LEVELS

For the coming week, there are 3 things to observe.

• VIX again tapered marginally from 14.53 to 13.49 levels. However, with the rapid dwindling of volumes, the VIX is becoming less representative of the fear factor.
• Nifty has its next support at 22,000 and below that the fall could be sharpen. Going ahead, 22,349 and 22,003 will be the key resistance and support levels for the Nifty.
• With the elevated uncertainty in the secondary markets, companies are putting off IPO issues, especially the big IPOs are already having second thoughts.

Despite positive vibes from the GDP data, the US-Ukraine fallout has created a big question mark in global macro equations. The coming weeks could set the direction of the discourse.