After a small recovery last week, the Indian equity market is brimming with anticipation as it looks to sustain its upward momentum. The Nifty 50 broke a three-week losing streak, closing nearly 2% higher despite global uncertainties, including the looming threat of trade wars. The rebound was fuelled by positive macroeconomic indicators, a drop in the dollar index, and liquidity support from the Reserve Bank of India (RBI).
As investors prepare for a shortened trading week due to the Holi festival holiday, several key factors could influence whether the Nifty 50 can break through the crucial 23,000 mark. With global market dynamics in play—from foreign institutional investor activity to crude oil prices and bond yields—next week could be pivotal for the index.
Sectors such as metals, capital goods, and energy outperformed, supported by optimism around China’s stimulus measures and lower crude oil prices. The fall in the dollar index also provided a boost to investor sentiment towards emerging markets, while US equity markets have been facing declines due to uncertainty surrounding Trump’s economic policies, according to Vinod Nair, Head of Research at Geojit Financial Services.
This week is likely to be a truncated one as markets will remain closed on Friday for the Holi festival holiday. The shorter week could lead to increased volatility as traders adjust their positions ahead of the break, as per ET report. Investors will be keeping an eye on several key factors that may influence the direction of the market:
FII activity
Foreign investors have sold equities worth nearly Rs 25,000 crore so far in March, taking the total equity selling in 2025 to Rs 137,354 crore. There’s also significant buying in Chinese stocks, driven by attractive valuations and expectations from recent positive government initiatives in China. The rally in Chinese stocks has propelled the Hang Seng Index to a YTD return of 23.48%, compared to the Nifty’s -5% return. However, experts, including VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believe this is likely a short-term cyclical trade as Chinese corporate earnings have been disappointing for years.
If foreign investors increase selling pressure, it could weigh on sentiment, but any inflows could continue the positive momentum seen last week.
Dollar index
The recent decline in the dollar index to 104 is viewed as a positive sign for emerging markets like India. A weaker dollar typically supports risk assets and boosts foreign inflows into equities, making it an important factor for the Indian market in the coming week.
Bond yields
US 10-year Treasury yields have dropped to 4.2%, providing relief to global equities. Lower bond yields reduce the appeal of fixed-income assets compared to stocks, which could encourage more risk-taking in equity markets.
Crude oil prices
Brent crude oil prices hit a six-month low following OPEC+’s decision to increase production and persistent concerns about growth in the US. A decline in crude oil prices is beneficial for India, a major oil importer, as it helps curb inflation and improve corporate profit margins, especially for energy-intensive industries. Brent crude oil prices were down by 3.8% last week, marking their biggest weekly decline since November.
Macro data and tariff concerns
Investors will be closely watching both domestic and global macroeconomic data. In India, the release of the Index of Industrial Production (IIP) and Consumer Price Index (CPI) inflation data will provide insights into economic momentum. Moreover, developments related to US inflation, non-farm payroll data, and potential tariff changes could significantly influence global market sentiment.
Technical indicators
Technical analysts suggest that Nifty 50 could continue its pullback rally in the coming sessions. “The zone of 22,670-22,700 will act as an immediate hurdle for the index, as it coincides with the 20-day EMA and the 38.2% Fibonacci retracement level from the recent downward move (23,807-21,965). If the index manages to stay above the 22,700 level, we may see the rally extend towards the 23,000 and 23,300 levels in the short term,” said experts from SBI Securities. On the downside, the 22,300-22,250 range is expected to provide support in case of any decline.
Disclaimer: The opinions, analyses and recommendations expressed herein are those of brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.
