Stock markets may face volatility in a holiday-shortened week ahead amid monthly derivatives expiry, besides global factors and foreign fund trading activity would continue to dictate terms, analysts said.
Factors such as movement of global oil benchmark Brent crude and the rupee would also guide the trend in equities.
Last week, the BSE benchmark fell 462.8 points or 0.79 per cent, while the Nifty slipped 155 points or 0.90 per cent. Both the benchmarks ended in the negative territory for the third week in a row.
Markets would remain closed on Thursday for Ram Navami.
Futures and Options expiry
"While volatility may increase locally before the March Futures and Options (F&O) expiry, the position of major international banks will continue to play a significant role in the direction of the market globally.
"The market will also keep an eye on the geopolitical situation because there is still tension between Russia and Ukraine and there is also some tension developing between the US and Syria. But, the market is not paying much attention to this. Due to FIIs' aggressive selling in recent months, the institutional flow will also be crucial," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Interest rates hike
Global markets have been turbulent amid worries over turmoil in the banking sector and uncertainty about what the Federal Reserve and other central banks will do with interest rates going forward.
Investors will very closely follow updates from the global banking system, especially from the US and Europe. Last week the markets were nervous after concerns emerged due to a 14 per cent fall of German lender Deutsche Bank due to a jump in credit default swaps. CDS works as a form of insurance for the company's bondholder against its default.
These concerns have been present since the collapse of Silicon Valley Bank, First Republic Bank's financial aid from 11 banks, the shutdown of Signature Bank and a recent bailout of Credit Suisse.
Post the crisis US regulators have assured the public that the banking system is safe. Even European Central Bank President Christine Lagarde offered reassurance when she said that the euro area was resilient because of solid liquidity positions and strong capital.
GDP growth number for US and UK
The final US growth numbers for the final quarters of financial year 2022 is expected to be released on March 30. Even the UKs GDP numbers for October and December will be watched by the investors. In the last week the Bank of England raised the interest by 25 bps even the US Federal Reserves also increased the interest rates.
On March 31 the fiscal deficit and infrastructure output data for the last month will be released. On the same day current account and external debt numbers for the December quarter will be released.
India's fiscal deficit for April-January increased to Rs 11.91 lakh crore that accounted for 67.8 per cent of the full-year target for the financial year.
Foreign exchange reserve
The foreign exchange reserve data for the week ended March 24 would be released on March 30. In March 17, the reserves increased to $572.801 billion due to increase in gold reserves and foreign currency.
Oil prices in the past week were in favor of net importers like India as fall in prices or steady rate help support the market.
Brent crude futures fell over 1 per cent on March 24 due to fear of slowing demand and correction in European banking shares. The comment by US energy secretary Jennifer Granholm where she said it would be difficult to refill government oil reserves this year could also have impacted the fall.
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