Rising tensions in the Middle East, liquidity conditions in the market and overall investment trend of foreign funds will largely dictate trend on the bourses in this holiday shortened week, say experts.
According to market analysts, the coming week is likely to witnesses some liquidity crunch as banks and debt/FX markets will be closed on April 2 for Mahavir Jayanti and then April 3 for Good Friday.
They said during March money market rates rise sharply as most banks refrain from lending overnight money as it impacts their capital.
After the benchmark sensitive index slipped below the psychological 28,000 mark, brokers said markets are expected to remain under pressure and trading volume is expected to be light in the coming week as well.
However, the RBI said it would closely monitor the liquidity situation and conduct liquidity operations if required.
“Considering the prevailing domestic scenario and global cues, it’s not going to be an easy ride for the participants, especially day traders this week,” Religare Securities President-retail distribution Jayant Manglik said.
During the past week, Sensex shed 802.44 points or 2.84 per cent and was quoted at 27,458.64 at the close of market hours on Friday.
Meanwhile, the NSE Nifty, comprising of 50 shares, closed lower by 0.75 points at 8,341.40 on March 27.
Manglik added the “Nifty index has reached near to its crucial support zone of 8300 so we may see some technical rebound happening in the coming sessions. However, the bounce may restrict mainly to the index majors and quality Midcap counters while rest may undergo in consolidation phase or decline further.”
Market participants, both domestic and global, would keep a close eye on oil prices amid rise in geopolitical tensions in Middle East as Saudi Arabia launched military operations in Yemen.
“Going ahead, there is no immediate trigger on the domestic front and hence markets may continue to be dictated by global factors. Quarterly results are also expected to be subdued,” Kotak Securities Head of Private Client Group Research Dipen Shah said.
On the economic front, HSBC India Manufacturing Purchasing Managers’ Index (PMI) for March 2015 is due this week. Moreover, the government would unveil eight core infrastructure industries data for February and unveil fiscal deficit data on Tuesday.