NIFTY opened the week with a huge gap-down at 17,076 and closed the day below 17,000. Tuesday saw a fantastic recovery. Markets consolidated in a wide range on the following days with extreme volatility due to news from Ukraine. The index opened with a gap-down on Friday and moved up but selling pressure took NIFTY down towards the end. NIFTY closed the week at 17,276, down 98 points or 0.57%.
BANK NIFTY underperformed the general market last week. The index had moved down to 36,650 before it recovered the fall. BANK NIFTY moved up on Tuesday and Wednesday but selling pressure from 38,500 took the index down to 37,300 and BANK NIFTY closed the week at 37,600, down 918 points or 2.38%.
All the sectors lost points last week except NIFTY IT. Metals moved down by more than 4%.
The mid-cap stocks and small-cap stocks followed the general market.
Foreign Institutional Investors net sold shares worth Rs 12,000 crores last week.
Domestic Institutional Investors net bought shares worth Rs 10,500 crores.
The markets were revolving around Ukraine news last week also. Russia continues with their military drills but said that they were withdrawing troops. But the US and NATO allege that Russia is on their plan to invade Ukraine. Eastern Ukraine saw shell bombings and we saw a chain of accusations and counter-accusations between Ukraine military and Russian backed rebels. To sum up the events, Ukraine still holds the view that NATO membership is a guarantee of security and as long as they do not drop the plan, we can expect the conflict to continue.
Inflation is another concern after the Ukraine crisis with the UK reporting the highest CPI inflation in the last thirty years. India reported January inflation at 6%, just at the boundary of preferred inflation. Morgan Stanley expects Fed to increase rates six times this year by 25 basis points each.
Indian Exports data showed that there was a jump of 25% in January. Crude oil imports rose by 27%. As you know we import 85% of the crude oil consumed and if there is a war, then we will be severely affected by the rise in crude oil prices.
ABG Shipyard scam also might have been a factor in the fall on Monday considering the fact that we had fallen much more than the West on Monday. However, Ukraine will be the major deciding factor next week.
SGX NIFTY is trading lower at 17,150.
INDIA VIX is at 22.2 now.
NIFTY has supports at 17,250, 17,210, 17,150 and 17,100. We can expect resistances at 17,380, 17,415, 17,500, 17,540 and 17,610.
BANK NIFTY has supports at 37,300, 37,000 and 36,700. Resistances are at 37,800, 38,000 and 38,400.
NIFTY has the highest call OI build-up at 18,000. The highest put OI build-up is at 17,000.
BANK NIFTY has the highest call OI build-up at 39,000 and the highest put OI build-up at 37,000.
Let us keep an eye on Reliance and HDFC which rallied on Friday despite the negativity surrounding the general market.
Any news regarding the scheduling of a Fed meeting before the scheduled March meeting will be a concern for the market. As of now, the Fed minutes of January show that there is a chance of a rate hike in the March meeting.
The US markets will be on a holiday tomorrow on account of President’s day. Keep an eye on the US futures to get an idea of the magnitude of events in case we get a bad news from Ukraine.
17,000 should act as a strong support for NIFTY if there is no major update on war and 17,800 should be the upper limit for the week.
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