"Markets next week would continue to be volatile guided by global developments on the ongoing trade issues between the US and China as well as the local political developments, especially the outcome of Rajya Sabha polls," Devendra Nevgi, principal partner, Delta Global Partners, said.
"Oil prices (Brent) have hit $70, adding to the risk aversion in India."
Last week, economic tensions between the world's two largest economies escalated after the US imposed tariffs on Chinese products and China announced plans for a retaliatory action.
"Market is expected to continue its volatile trade going forward and investors will continue to keep close eye on further actions by Donald Trump and the reaction of the Chinese government," said D.K. Aggarwal, chairman and managing director of SMC Investments & Advisors.
"Besides, global macroeconomic data releases, the movement of rupee against the dollar, crude oil price movement, investment by FPIs (foreign portfolio investors) and DIIs (domestic institutional investors) will continue to give direction to the markets."
In addition, parliamentary proceedings, macro-economic points like Index of Eight Core Industries (ECI) figures, along with the country's fiscal deficit numbers up to February and its external debt data will be keenly watched by investors.
"The fiscal deficit number for February to be declared on the coming Wednesday (March 28) will be closely watched for slippages," Nevgi said.
According to Vinod Nair Head of Research at Geojit Financial Services, apart from weak global cues, domestic market "is underperforming" due to premium valuation, profit booking led by LTCG (long-term capital gains) tax and pre-election political uncertainties.
"We can expect this domestic chaos to stabilise by the end of FY18, as redemption pressure will be over. But due to risk of escalation in global trade war and domestic pre-election uncertainties, volatility may continue for some more time," Nair said.
Investment-wise, provisional figures from the stock exchanges showed that last week, foreign institutional investors purchased scrip worth Rs 2,524.13 crore and the DIIs invested Rs 211.91 crore in equities.
The National Securities Depository (NSDL) revealed that FPIs invested Rs 2,060.04 crore, or $316.99 million in equities during March 19-23.
Technical charts showed a bearish outlook for the National Stock Exchange's (NSE) Nifty.
"The Nifty remains in downtrend and further downsides are likely early next week once the immediate supports of 9,952 points are broken," said Deepak Jasani, Head of Retail Research for HDFC Securities.
"Immediate resistance is now at 10,227 points."
The key Indian equity indices -- the BSE Sensex and the NSE Nifty50 -- closed last week at 5-month low levels on the back of trade protectionist measures, apart from the ongoing turmoil in the domestic banking system as well as the uncertainty on the political situation in the country.
Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE shed 579.46 points or 1.75 per cent to 32,596.54 points -- its lowest closing level since October 23, 2017.
Similarly, the Nifty50 of the NSE edged lower. It ended below the psychologically important 10,000-mark level and closed last week's trade at 9,998.05 points -- down 197.1 points or 1.93 per cent -- its lowest closing level since October 11, 2017.
The Indian equity markets will be closed on Thursday and Friday on account of Mahavir Jayanti (March 29) and Good Friday (March 30), respectively.
Stock recommendations By AUM Capital
A. ICICI Prudential Life insurance: Buy with a stop loss of Rs 368 and a target of Rs 398.
B. Radico Khaitan: buy with a stop loss of Rs 335 and a target of Rs 359.
C. Jindal Steel and Power: Buy with a stop loss of Rs 205 and a target of Rs 225.
D. Shilpa Medicare: Buy with a stop loss of Rs 473 and a target of Rs 500.
The IPO Week Ahead
Lemon Tree hotels IPO will open on Monday and close on March 28. The Lemon Tree Hotels IPO price band is between Rs. 54 and Rs. 56 per equity share of face value of Rs. 10 each. The P/E ratio based on EPS for the fiscal 2017 is 771 (floor price) and 800 (cap price)
ICICI Securities IPO opened on Wednesday with a price band of Rs. 519- Rs. 520 per share for the initial public offering. The ICICI Securities IPO kicked off on March 22 (Thursday) and will close on Monday (March 26).On Friday, 1.59 crore shares subscribed to the ICICI Securities IPO against the total number of 4.42 crore bids, making it 36% of the total subscription. The IPO's P/E (price/earnings) ratio in the lower price band is Rs. 49.5, while the highest P/E of a peer in the industry is 45.2. By this rationale, the IPO seems overpriced at Rs. 519 for a share of face value Rs. 5.
Stocks to watch out for:
Bharat Heavy Electricals (BHEL): It has entered into a Technology Transfer Agreement with Indian Space Research Organisation (ISRO) for the manufacture of space-grade Lithium-ion cells of various capacities utilising the technology developed by ISRO at its Vikram Sarabhai Space Centre (VSSC).
Mahindra Group and Ford Motor Company: Auto majors have signed five memoranda of understanding (MoUs) that strengthen their strategic alliance and accelerate the development of key products for consumers in India and emerging markets. The duo will jointly develop new SUVs, and a small electric vehicle as part of several initiatives.
Hero MotoCorp: The auto company has started the construction of its new manufacturing facility in the state of Andhra Pradesh. This will be the eighth manufacturing facility of Hero MotoCorp. The new facility is spread over 600 acres in the Chittoor district of Andhra Pradesh, the facility will have an annual installed capacity of 1.8 million units, which will be achieved in three phases. The company will invest Rs 1,600 crore in setting up the manufacturing facility.
Dilip Buildcon (DBL): The company has been declared as Lowest (L1) bidder for a new Hybrid Annuity Project valued at Rs 936 crore by the National Highways Authority of India (NHAI) in the State of Telangana.
