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NEW DELHI: Thanks to sustained foreign portfolio investment (FPI) inflows, Indian equity benchmarks Sensex and Nifty closed last week in the positive terrain.
While Sensex climbed 608 points or 1.68 per cent, Nifty advanced 172 points or 1.58 per cent during the week.
Softening crude oil prices and stronger rupee were the factors that seemed to have made investors rethink their strategies on Dalal Street.
Analysts also attributed this rally to the improved prospects of a stable Narendra Modi-led government in the forthcoming general elections.
Market may remain on a stable path for some time but pre-election jitters may play a spoilsport.
"Market is likely to remain slightly positive on account of steady inflows by foreign investors.
However global front combined with elections may infuse some volatility," said Debabrata Bhattacharjee, Head of Research, CapitalAim.
In the coming week, the market will react to inflation numbers, global sentiment and crude's movement.
Let's take a look at factors that can dominate market mood:Inflation prints: All eyes will be on inflation numbers for February.
The retail inflation data, known as CPI, will be released on Tuesday, whereas whole inflation data, WPI, will be released on Thursday.
Softer inflation prints will increase the chances for a rate cut by the RBI in its next policy meet.
IIP: The Index of Industrial Production (IIP) data for January will be released on Tuesday.
On the same day, the January manufacturing output data will also be released.
India’s industrial production grew by 2.4 per cent in December, a month after recording a 17-month low growth due to poor show from the manufacturing sector.
Experts say January IIP numbers may come on a softer side.
Meanwhile, a decline in output of crude oil, refinery products and electricity pulled down the growth of eight core sectors to 1.8 per cent in January.
BoJ policy meet: The Bank of Japan monetary policy meet will be a significant event for markets despite the fact that a revision in rates is highly unlikely.
A slowing economy in the wake of trade tussle has forced major central banks of the world to pause the rate hikes, while some of them went for fiscal stimulus.
Market awaits if BoJ follows this trend.
Global sentiment: Sentiment across globe has remained sombre due to worries over economic slowdown.
Several poor sets of data from the US and China have made this worry even stronger.
Last week, the European Central Bank cut growth forecasts and announced policy stimulus to prop up eurozone economy.
Major American and European markets ended last week with their biggest weekly losses since December.
Brexit saga is back: The British policymakers will vote on Prime Minister Theresa May's revised Brexit deal on Tuesday.
There are high chances that May will lose the vote.
In that case, lawmakers will vote on Wednesday and Thursday to rule out a no-deal Brexit and on delaying Britain’s departure.
A Reuters poll of economists predicted Brexit to be delayed by a few months, with a free-trade deal eventually agreed.
Crude's course: Global crude oil suffered losses of nearly 1 per cent on Friday as concerns over economic slowdown clouded prospects of oil consumption.
The Opec-led supply cut, which may continue for now, is saving the oil prices from suffering a steep fall.
As per Reuters, Saudi oil minister Khalid al-Falih has said that China and the US would lead healthy global demand for oil this year but that it would be too early to change Opec output policy at the group’s next meeting in April.
Softer crude is a boon for India's economy as it narrows the fiscal deficit range.
However, if crude starts climbing due to supply cut, the momentum of FPI inflow will be jeopardized.
Technical charts indecisive: Nifty formed an indecisive ‘Doji’ candle on the daily chart on Friday, reversing its higher high-low formation and settling at sub-11,050 level.
The index is holding 11,000 level, which is crucial for it, but sentiment may turn negative if the index goes below this level.
"Nifty is gradually progressing holding the 11,000 levels with RSI on the daily chart at 62 bringing in scope for further upside; however, in between dips cannot be ruled out," said Vaishali Parekh, Senior Technical Analyst at Prabhudas Lilladher.
Support for the week is seen at Rs 36,000/10,820, while resistance is seen at 37,280/11,230, she added.
