Market outlook for the week (17-Mar to 21-Mar)

17 Mar 2025 , 09:59 AM

SECTORAL STORY FOR THE WEEK TO MARCH 14, 2025

The week to March 07, 2025 saw Nifty and Sensex correcting by -0.69% and -0.68% respectively. During the week, FPIs were net sellers of $(604) Million in Indian equities, as caution continues to dominate. Here are the 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (14-Mar)	Index (07-Mar)
Nifty Healthcare	0.31%	13,075.75	13,034.85
Nifty CPSE	0.00%	5,713.75	5,714.00
Nifty FMCG	-0.02%	51,879.25	51,891.80
Nifty India Defence	-0.43%	5,655.90	5,680.40
Nifty Chemicals	-0.56%	26,393.94	26,543.20
Nifty Infrastructure	-0.76%	7,939.75	8,000.85
Nifty Oil & Gas	-0.79%	10,021.80	10,101.50
Nifty Banks	-0.90%	48,060.40	48,497.50
Nifty Non-Banks	-1.32%	24,266.00	24,591.65
Nifty Private Banks	-1.39%	23,955.70	24,292.95
Nifty Metals	-1.67%	8,777.65	8,926.90
Nifty Mobility	-1.73%	17,612.25	17,922.15
Nifty MNC	-1.92%	25,286.80	25,782.15
Nifty Consumer Durables	-1.93%	34,585.75	35,266.30
Nifty Realty	-1.98%	800.15	816.35
Nifty Automobiles	-2.17%	20,554.05	21,009.70
Nifty PSU Banks	-2.49%	5,783.85	5,931.40
Nifty India Digital	-3.64%	7,836.00	8,132.20
Nifty Capital Markets	-4.31%	2,928.40	3,060.30
Nifty IT	-4.49%	36,122.50	37,820.45

Data Source: NSE

Here are key takeaways from weekly sectoral returns.

• In contrast to last week, 18 out of 20 sectoral indices gave negative returns. Sectors that showed relative strength were defensive plays like Healthcare, CPSEs, FMCG, and Chemicals. IT and Capital Markets took the big hit, falling more than 4% this week.
• Banks were relatively subdued, which explains the limited fall in the Nifty and the Sensex. However, sectors like IT, Capital markets, and digital with high small and mid-cap content; were hit sharply. IT took a big hit on global tech spending concerns.
• For the week, the arithmetic average of returns of the 20 sectors stood at -1.61%. The bottom 10 sectors delivered -2.63%, while top-10 delivered -0.59%. There were 5 sectors falling more than 2%; of which 2 sectors fell more than 4% in the week.

Nifty VIX trended lower at 13.27 levels. However, volumes have dwindled sharply in the markets, which limits the analytical value of VIX.

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

What decided the market move last week? Here are the positive triggers first. Firstly, the consumer inflation came in sharply lower at 3.61%, below the RBI target level of 4.0%. This was supported by a sharp fall in food inflation. Even the index of industrial production (IIP) was up 5.01% for Jan-25, with manufacturing leading the bounce. On the key macros, the USDINR steadied to ₹86.95/$, amidst the dollar swaps, while oil also helped by staying subdued around $70/bbl. The good news could come from an RBI rate cut in April 2025.

Let us turn to the negative swing factors in the week. Global uncertainty and Trump tariffs continued to roil the global markets. Amidst the turmoil, lower US inflation had little impact on the markets. For the first time in FY25, India saw a sharp 27% fall in equity fund inflows at ₹29,303 Crore for February. To add to the problems, the SIP stoppage ratio has also gone up to an all-time high of 122.8% in February, showing that retail wallets are getting really strained. That could have larger repercussions for domestic consumption and spending.

STOCK MARKET TRIGGERS FOR COMING WEEK TO MARCH 21, 2025

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

• For the coming week, the big domestic data points will be the WPI inflation and the trade deficit data. Both are likely to be negatively impacted by the current bout of global uncertainty. While WPI inflation is expected to jump by 5-10 bps, the merchandise trade deficit is expected to widen beyond $23 Billion. Services surplus could offer support.
• The two major data points in focus continue to be crude prices and USDINR equation. While the uncertainty and growth concerns have kept oil prices down, that is not entirely salutary. However, the surge in dollar swaps for domestic liquidity has helped to strengthen the rupee; or at least, it has stopped its free fall.
• In terms of global data flows, the big focus area next week will be the US FOMC policy statement by Jerome Powell and the quarterly update on macro projections. The CME Fedwatch does not expect any rate cut in March; in fact, not before June 2025. Focus would also be on the US-Russia talks to be held in Saudi Arabia and the tariff talk.
• Key global data points. Powell speak, retail sales, business inventories, Atlanta Fed GDP, housing starts, IIP, oil inventories, and initial jobless claims (US). IIP, unemployment (China); Trade, Core CPI (EU); Trade, Monetary Policy, CPI (Japan); MPC vote, jobs (UK).

What does this mean for Nifty and Sensex in the coming week to March 21, 2025.

PARTING THOUGHTS ON MARKET INDEX LEVELS

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

• VIX was marginally lower at 13.23 levels compared to 13.47 last week. However, with dwindling market volumes, VIX is becoming less representative of the fear factor.
• Nifty has its next big support at 22,100 levels. Going ahead, 22,544 and 22,328 will be the key resistance and support levels for the Nifty from positional perspective.
• Most IPO issues are on hold for the last one month, and this week will only see the first mainboard IPO hitting the market. FPI reaction will be of interest in this IPO.

Despite positive macro data flows, global uncertainty still dominates. The focus now shifts to the Fed policy statement and the quarterly projections update. For India, the Q3 current account deficit (CAD) will be a key data point to watch!