Market Outlook
Today’s market mood was notably gloomy, closing below a significant head and shoulders pattern threshold, signaling a potential drop towards 20,100-20,200 based on this formation. The upcoming Federal Reserve meeting is a pivotal event that could influence market directions, adding to the current dull market sentiment.
Nifty Heatmap
The market heatmap was overwhelmingly red, with significant downturns led by TCS following a sale by Tata Sons, resulting in a 4% drop. Other IT stocks like Infosys, Wipro, Tech Mahindra, and HCL Tech also experienced declines, contributing to the IT index’s weak performance. FMCG sector wasn’t spared either, with ITC, Hindustan Unilever, Nestle, and Britannia all recording losses. The pharma sector, too, faced setbacks with significant drops in Cipla, Dr. Reddy’s, Sun Pharma, and Dr. Reddy’s Lab. Other notable declines were seen in Reliance, State Bank of India, Axis Bank, Tata Motors, Mahindra & Mahindra, Adani Ports, Adani Enterprises, and L&T, marking a day where finding refuge was challenging, except for HDFC Bank which remained unchanged.
Sectoral Overview
In terms of sector performance, IT suffered the most, followed by pharma, FMCG, and public sector enterprises, each losing around 2% or more, indicating a market anticipating further downward movement. The past week and month have shown a pronounced downtrend, with the last three months starting to reflect a negative turn as well, despite private banking and FMCG sectors showing some resilience from a three-month and twelve-month perspective.
Mid & Small Cap Performance
Mid-cap stocks experienced a bounce but faced resistance at previous support levels, suggesting potential for further declines without a clear recovery signal. Similarly, small caps followed this trend, unable to break past recent highs, hinting at more downside risk.
Nifty Bank Overview
Nifty Bank, while showing resilience, is forming a potentially bearish pattern.
Nifty Junior
Nifty Next 50 has also struggled to find direction after recent sharp movements. Stocks that are coming out of Nifty down into Nifty next 50 are doing very well. Stocks that are about to go into Nifty and have been in Nifty next 50 also do very well. So hence nifty next 50 is that very nice 50 stock place where stocks really come and perform.
Implications for U.S. monetary policy
Despite the challenges, there’s an underlying optimism for a rally leading up to the elections, based on historical trends where markets tend to rise in anticipation. However, external factors, such as the recent interest rate hike by Japan and its implications for U.S. monetary policy, add complexity to future market movements.
The focus on commodities, with notable movements in copper and Brent oil, alongside the strengthening U.S. dollar against the Indian rupee, suggests shifting dynamics that could impact global and Indian markets alike.
Copper
You can see copper here in the last few weeks has really bounced very hard, has broken out of the range right now correcting. But if this continues upwards, then there could be pressure on a lot of industries in terms of inflation, on cost of materials used.
Brent Crude Oil
Brent is also going up. You can see there is a sort of an inverse head in head and shoulders pattern, also with a ten point head. So we could look at going back towards these highs.
The US dollar to indian rupee is also spiking. We were at 82.65 just few days back and now we are at 80.315 and the highs are 83.45. So something is changing. Maybe it is this dynamics that has started from Japan where USD, japanese yen is breaking out of a multidecade high at 150 and that is causing dollar strengthening across the board.
Today’s Fed meeting, while not anticipated to bring significant rate cuts, is crucial for providing clarity on future monetary policy directions. The remainder of March may remain subdued, with hopes pinned on a strong recovery as the month closes, setting a positive tone for the coming election period.
