Stock market outlook: Geopolitical tension, crude prices to impact bourses this week

Stock market outlook: Geopolitical tension, crude prices to impact bourses this week

Santosh MeenaUpdated: Sunday, March 06, 2022, 11:04 AM IST
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The Russia-Ukraine issue is a key factor that will continue to lead to volatility while the inflation numbers in the US which is going to be announced on March 10, will be another critical factor for markets/BSE | (PTI Photo/Kunal Patil)(PTI06-03-2020_000119B)

The weakness will continue in the Indian stock markets on the back of intense geopolitical tension and a sharp surge in commodity prices. The geopolitical uncertainty is still there while we are heading for an events-heavy week where the outcome of state elections on March 10, will be the main domestic event.

Globally, the Russia-Ukraine issue is a key factor that will continue to lead to volatility while the inflation numbers in the US which is going to be announced on March 10, will be another critical factor for markets because it is likely to be multi-decades high.

Commodity prices are continuing their northward journey, mainly crude oil prices that are near to $120 per barrel. That is a major headwind for the Indian markets. Therefore, stock markets will maintain a close eye on crude oil prices.

FIIs are selling relentlessly and the selling momentum has picked up in the last few trading sessions where they have sold more than 22,000 crore, while DIIs are trying to support the market as they bought around 17,000 crore last week.

If we look at the derivative data then FIIs' long exposure in the index future dipped to 43 percent, while the PCR ratio of 0.85 is a little oversold.

OI distribution is scattered and does not give clear levels however there are no conviction input writers.

Technically, the overall structure is looking weak where 16,150-15,950 is a critical and immediate demand zone below this, selling pressure may get extension towards 15,500 level. On the upside, 16,500/16,800 are immediate resistance levels while 17,000-17,100 is a critical resistance zone and bulls will get confidence only above 17,100 level.

The structure of Banknifty is also weak however 34,000 is a crucial support and if banknifty manages to hold this level then we can expect a bounce-back where 35,000-35,500 is an immediate resistance area while 36,300-36,600 is a critical resistance zone.

(Santosh Meena is Head of Research, Swastika Investmart Ltd.)

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