Influencing Trends on Global Stock Markets

Stock markets are likely to witness volatility this week amid monthly derivatives expiry, ongoing Russia-Ukraine conflict, and high crude oil prices, analysts said. Geopolitical tensions and supply-side concerns would continue to dominate investor sentiment, they added.

Indian markets could open flat to mildly higher in line with mixed Asian markets today and despite positive US markets, said Deepak Jasani, Head-Retail Research, HDFC Securities.

Stocks will continue to grapple with rising rates and high oil prices in the near term but there is a bright chance the market may have a positive tone in near term as Window Dressing could be the preferred theme at Dalal Street as financial year 2021-22 comes to an end on Thursday, March 31, 2022, said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd. Nifty bulls will aim for a stirring rally, hopefully the bounce is neat and takes the index towards its biggest hurdles at 17500-17807 zone.

The major attention of the investors will be on the upcoming Q4 earnings season. Also focus will be on Auto Sales numbers that will trickle in on Friday, 1st April 2022.

However, volatility will continue to be the hallmark in this week’s trading as well as Russia-Ukraine war continues to command investors’ attention. Investors will continue to monitor the latest news from the war in Ukraine.

The last expiry week of the FY22 is starting today, the markets are expected to stay muted for the week, said Mohit Nigam, Head - PMS, Hem Securities. Among the news that will be in the limelight for the week is the Ukrainian war and how the dialogues are done with Russia to get to an end. The fuel prices which kept unchanged for the long-time due to state elections and thereafter are seeing a small rise daily. The higher prices are expected to pinch the consumer pockets hard, who are already facing high inflation in many essential commodities.

Among the stock specific news, PVR has approved the merger with Inox Leisure, as the industry was suffering due to the pandemic effects and hoping for better profitability in times ahead. MTAR technologies saw significant change of hands on the last trading day, majorly shifting from some PE investors to the Mutual funds signalling further participation of indirect retail investors in the firm. Gold jewellery firm Joy Alukkas operating over 85 stores in the country has filed an IPO of 2,300 crores to pay back the loans as well as to expand the network, Nigam said.

On the technical front Nifty50 is expected to have support and resistance at 17,000 and 17,350 respectively for the bank Nifty the levels seems to be at 35,100 and 35,800 respectively.

Nifty fell for the third consecutive session on March 25 dragged by consumer durables and information technology stocks. Nifty ended at 17153 down 70 points or 0.4 percent, recovering slightly from the day's low of 17,076.

Nifty is finding it difficult to build on the gains over the last few days. It could now remain in the 17,076-17,354 band for the next few sessions

BSE Auto index has corrected around 4%

Digging deeper, the BSE Auto index, so far in March 2022 has corrected around 4 percent which in fact is the biggest underperformer amongst sectorial indices in March, said Tapse. The auto sectors underperformance can be blamed to rising industrial metals prices that are hurting margins despite the recent price hike. Higher oil prices are also weighing over demand.

Asian shares slip

Asian shares and oil prices both slid on Monday as coronavirus lockdown in Shanghai looked set to hit global activity, while the yen extended its stomach-churning descent as the Bank of Japan acted to keep local yields near zero.

Early action on Monday was muted with MSCI's broadest index of Asia-Pacific shares outside Japan off 0.8 percent. The index is down 3 percent. for the month but well above recent lows. Chinese blue chips shed 0.8 percent. Japan's Nikkei lost 0.4 percent., but is still almost 6 percent. firmer for the month as a sinking yen promised to boost exporter earnings.

China's financial hub of 26 million people told all firms to suspend manufacturing or have people work remotely in a two-stage lockdown over nine days.

US stocks close higher

US stock benchmarks closed mostly higher Friday, following choppy trade, after oil prices rebounded on the back of reports of a missile strike on a Saudi Aramco facility and as investors continued to weigh rising interest rates. US stocks rose in a choppy day of trading as dip-buyers emerged in the final minutes of trading Friday.

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each booked a second straight week of gains, as investors largely looked past the Russia-Ukraine war to increasingly hawkish commentary from Federal Reserve officials.For the week, the Dow booked a gain of 0.3 percent , the S&P 500 rose 1.8 percent and the Nasdaq advanced 2 percent.

S&P 500 stock futures eased 0.3 percent, while Nasdaq futures slipped 0.4 percent. EUROSTOXX 50 futures and FTSE futures both held steady for the moment. Wall Street has so far proved remarkably resilient to a radically more hawkish Federal Reserve. Markets are pricing in eight hikes for the remaining six policy meetings this year, taking the funds rate to 2.50-2.75 percent.

Moscow signaled on Friday it was scaling back its ambitions in Ukraine to focus on territory claimed by Russian-backed separatists.

Economists expect four 50 basis points interest hikes from Fed

Economists at Citibank are expecting four 50 basis points interest rate hikes from the Fed this year, joining other Wall Street banks in forecasting an aggressive tightening path against the backdrop of soaring inflation.

In US economic data Friday, the final reading of the University of Michigan’s consumer sentiment in March fell slightly to 59.4 and stayed at a nearly 11-year low because of high inflation and angst about the Russian invasion of Ukraine. In other U.S. economic data, pending home sales slid 4.1% in February, according to the National Association of Realtors on Friday. That’s the lowest level in nearly two years.

The yield on the US 10-year Treasury note jumped about 15.1 basis points to 2.491 percent, the highest since May 6, 2019

Crude prices decline

Crude prices slid 2 percent on Thursday after the European Union (EU) could not agree on a plan to boycott Russian oil and on reports that exports from Kazakhstan's Caspian Pipeline Consortium (CPC) terminal could partially resume.

On Friday, crude oil showed very high volatility as prices cooled off in the early trading session after the US President said for supplying additional gas to the European Countries but pricesrecovered again in the late evening session after attack on the Saudi Arabia oil facility. Yemen's Houthis said they launched attacks on Saudi energy facilities on Friday and the Saudi-led coalition said Aramco's fuel distribution station in Jeddah had been targeted by an attack, but that a fire in two tanks at the facility had been brought under control. Saudi Arabia also said in a statement that it will not be hold responsible for short supply of oil due to Houthi attacks. Global markets are already facing short supply due to Russia-Ukraine war and any supply disturbance from the Saudi could continue to support oil prices.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd said, crude oil prices will continue to remain volatile this week ahead of the OPEC meetings. Crude oil is having support at $107.00–104.80 and resistance is at $112.80–115.00. In INR terms crude oil has support at Rs 8,450-8,300; while resistance is at Rs 8,748–8,880.

Fuel prices hiked

Petrol price on Monday was hiked by 30 paise a litre and diesel by 35 paise, taking the total increase in rates in the last one week to Rs 4-4.10 per litre.

This is the sixth increase in prices since the ending of a four-and-half-month long hiatus in rate revision on March 22.

Petrol in Delhi will now cost Rs 99.41 per litre as against Rs 99.11 previously while diesel rates have gone up from Rs 90.42 per litre to Rs 90.77, according to a price notification of state fuel retailers.

Rates have been increased across the country and vary from state to state depending upon the incidence of local taxation.

In the financial capital-Mumbai, petrol is being retailed at Rs 114.19 per litre and diesel now costs Rs 98.50 a litre. In Kolkata, petrol is being retailed at Rs 108.85 while diesel costs Rs 93.92 per litre. In Chennai, petrol is available at Rs 105.18 and diesel for Rs 95.33.

PVR, INOX to merge

India's two largest multiplex firms PVR and INOX said on Sunday they would merge to create a giant cinema operator with more than 1,500 screens across 109 cities as the entertainment industry recovers from the COVID-19 pandemic.

China industrial profits up

Data released over the weekend showed Chinese industrial profits grew in the first two months of the year. Profits at China’s industrial firms rose 5.0 percent for the January to February period

Asian shares stalled and oil prices slid on Monday as a coronavirus lockdown in Shanghai looked set to hit global activity, while throwing another wrench into supply chains that could add to inflationary pressures.

Bullion to be under pressure

On Friday, gold and silver showed profit taking at higher levels after record gains in the US bond yield and strength in the dollar. The dollar index also gained for the second straight week due to ongoing Russia-Ukraine war. However, gains in global energy prices and downbeat US pending home sales, durable goods and core durable goods orders data released last week supported precious metals. Higher global energy prices continue to fuel global inflation and derail global economic growth and could support precious metals.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd. said, gold and silver could show some pressure ahead of the new round of Russia-Ukraine talks to take place on 29-30 March. Gold has support at $1932-1920, while resistance at $1955-1965. Silver has support at $25.05-24.80, while resistance is at $25.55-25.80. In INR terms gold has support at Rs51,680–51,480, while resistance is at Rs 52,100–52,180. Silver has support at Rs 68,240- 67,980 while resistance is at Rs 69,280–69,880.

Currency outlook

USDINR 29March futures contract showed high volatility last week. On the weekly technical chart a pairis sustaining above its weekly resistance level of 75.5500. Rahul Kalantri, VP Commodities, Mehta Equities Ltd said, As per the weekly technical chart, a pair crossed its resistance level of 75.5500 and sustaining above these levels. Looking at the technical set-up, a pair is in a positive territory but facing steep resistance around 76.5500 levels. "We expect a pair could trade in the range of 75.9500-76.5500 and either side breakout of the range will give further directions." Kalantri added.