Market Outlook: Global Cues, Direction Of Funds To Impact Market Movement

Apart from developments on the domestic front, the Indian equity markets would seek direction from global markets during the coming week, said market analysts.

"With the results season almost over, all the focus will continue to remain on the global cues," Arpit Jain, AVP at Arihant Capital Markets, told IANS.

"Last week, the Dow Jones increased by 4.5 per cent and recovered 50 per cent of its recent losses. Hence, once the domestic concerns settle, Indian indices are likely to take part in global rally," he added.

In addition to global cues, the movement of funds and crude oil prices are expected to influence the market sentiment next week.

"It is expected that volatility of global stock markets, along with rupee-dollar movement, inflow of funds from both foreign and domestic market participants and crude oil prices are expected to influence the domestic market going forward," D. K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, told IANS.

Last week, the rupee strengthened by 18-19 paise to close at 64.21-22 against the US dollar.

Provisional figures from the stock exchanges showed that foreign institutional investors remained net sellers last week and sold off scrips worth Rs 2,849.1 crore.However, domestic institutional investors purchased scrips worth Rs 2,368.01 crore.

With various developments taking place in the banking sector of the country, analysts were of the view that the NSE Nifty50 could be further dragged lower by the Bank Nifty index -- which has a greater weightage -- the following week.

"What we saw during the past week was a 'time-wise' correction. Next week, we will be proceeding towards the next leg of correction and may see markets drifting lower," said Sacchitanand Uttekar, Assistant Vice-President, Research at Tradebulls.

According to Uttekar, banks were leading the downward rally because of domestic cues like the $1.8 billion Punjab National Bank (PNB) fraud and the state-run banks drifting lower.

"Since the last two sessions, the scenario has changed with the private banks also taking a hit. The Bank Nifty index was dragging the Nifty50 lower," Uttekar told IANS.

A massive sell-off in the banking sector stocks was triggered last week after the Reserve Bank of India (RBI) announced new norms to deal with non-performing assets.

Besides, the multi-crore fraud detected at one of the Mumbai branches of PNB led to a drastic decline in the shares of the company, along with the PSU Bank Nifty index.

"Going forward, banks could see much deeper levels and magnitude of the fall could be higher for the Bank Nifty," Uttekar added.

On technical levels, Deepak Jasani, Head, Retail Research, HDFC Securities, said: "With the Nifty continuing to correct the past week after breaking a trend line support a few weeks back, the underlying short-term trend remains down."

"Further downsides are likely early next week once the immediate support of 10,434 is broken. Any pull-back rallies could find resistance at 10,618," Jasani told IANS.

Last week, trade in the Indian equity markets was almost flat with a slew of domestic developments like the PNB fraud impacting the market mood.

On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) rose a tad by 5 points or 0.01 per cent to close at 34,010.76 points. The wider Nifty50 of the National Stock Exchange closed a bit lower by 2.65 points or 0.02 per cent at 10,452.30 points.

IANS