The trading activity in the domestic equity markets is likely to remain volatile this week as investors will focus on global cues such as the outcome of the US Federal Reserve meeting and the US banking crisis due to lack of local triggers, analysts said.
FII activity and movement in the rupee and oil prices will also be watched by traders as global trends have been dictating the direction of the local stock markets currently, they added.
The US banking crisis remained at the center stage keeping the participants on their toes. Besides, the continuous outflow of foreign funds added to worries, analysts said.
Trading last week
Benchmark Sensex and Nifty declined by around 2 per cent despite a recovery in the last two sessions due to selling in financials, IT, auto and banking stocks as fears of contagion of the US banking crisis kept investors on the edge.
US FOMC Meet
Traders are expecting the US Federal Open Market Committee to go for a lower 25 basis point cut or even pause the rate hike in its meeting as US inflation has eased to 6 per cent in February from 6.4 per cent a month earlier and the economy stares at a banking crisis.
US Banking crisis
The US banking space will play an important role in the markets next week especially after Silicon Valley Bank filed for bankruptcy and Signature Bank shut down.
First Republic Bank could have been the third one facing a similar issue, but it was saved by JP Morgan Chase, Morgan Stanley and 9 others that offered a #30 billion lifeline.
The banking crisis is not just limited to the US as even Credit Suisse received $54 billion from the Swiss National Bank to boost liquidity.
On Friday, foreign institutional investors (FIIs) were the net sellers and sold Indian equities worth Rs 1,766.53 crore while domestic institutional investors (DIIs) were net buyers at Rs 1,817.14 crore.
Foreign investors have put in Rs 11,500 crore in the Indian equities so far this month, mainly driven by bulk investment from the US-based GQG Partners in the Adani Group companies.
Going ahead, FPIs may take a cautious stance in their approach in the coming days following the collapse of the US-based banks, experts said.
Even oil prices fluctuated with the crisis in the banking sector. Brent crude futures fell close to 12 per cent at $72.97 a barrel, this is the lowest closing since December 2021, whereas US oil prices fell 13.5 per cent in the last week.
Foreign exchange data
The foreign exchange reserves data for the week that ended on March 17 is expected to be released on March 24. The forex reserves for the week that ended on March 10 hit the lowest since early-December 2022.
With inputs from PTI
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