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The geopolitical tension between Russia and Ukraine took center stage in the week gone by as military operations by Russia spooked investor sentiments. Equity markets plunged sharply lower worldwide as investors turned risk-averse before staging a sharp pullback on Friday as the sanctions on Russia were not as severe as feared and value buying emerged. Indian stock market benchmarks Nifty and Sensex ended lower by 3.6% and 3.4% respectively for the week. The broader markets too witnessed deep cuts as both midcap and smallcap ended lower by 3.4% and 5.3% respectively.
The impact of geopolitical concerns was reflected in commodity prices, especially oil which breached 8-year high of $100 during the week. For the coming week, the geopolitical developments are expected to keep the markets volatile. Traders will also be keenly watching for clues as US Federal Reserve chairman Jerome Powell's congressional testimony is also scheduled next week.
On the domestic front, macroeconomic data viz. GDP numbers and Infrastructure output data are scheduled for next week.
Nifty, Bank Nifty outlook next week: Here is what analysts say:
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The sharp comeback of Nifty on Friday could be a cheering factor for bulls to make a comeback. But the crucial overhead resistance of around 16700-16800 levels could be a tough task to sustain the highs. Further upside from here is likely to encounter the resistance in the short term and one may expect weakness emerging from the lower highs. Immediate support is placed at 16500 levels.
Santosh Meena, Head of Research at Swastika Investmart
It was a brutal week for the market where Nifty had surrendered its 200-DMA and witnessed a sharp cut of more than 6%. However, it ended the week with a cut of 3.5% thanks to recovery on Friday. The key reason behind the massive fall was the military action against Ukraine by Russia where a sharp rise in crude oil prices and F&O expiry provided more power to bears in the Indian market. The situation is still uncertain and India VIX is still above 25 levels. Therefore, we can expect volatility to continue in the coming week as well.
Derivative data is little supportive as FIIs are buying in index future and stock future where FIIs' long exposure in index future has jumped to 62% from 60%. Put call ratio is sitting at 1.02 mark which is neutral for the market.
Technically, Nifty surrendering its 200-DMA has changed the overall structure of the market. It took support at 16200 levels and then witnessed a smart pullback. However, 16900-17000 area is a critical resistance zone because it is placed at 200-DMA. If Nifty manages to take out the 16900-17000 supply zone, then we can expect a rally towards 17200/17400 levels. On the downside, 16,200 is an immediate and strong support level; below this, Nifty may again revisit the 15900-15700 support zone.
Bank Nifty has also surrender 200-DMA while 35000 is an immediate and psychological support level while 34250-34000 is the next critical support zone. On the upside, 200-DMA of 37,000 is an immediate resistance level.
Ajit Mishra, VP Research. Religare Broking
In the coming week, the prevailing Russian-Ukraine crisis will remain in focus. Besides, on the domestic front, important macroeconomic data viz. GDP numbers and Infrastructure output data are scheduled for February 28. With the beginning of the new month, the auto sales data will also start pouring in from March 1.
Markets have finally ended the 4-month long consolidation phase and look structurally weak now. On the index front, Nifty has the next major support around 15,900-16,000 zone. To negate the view, it should reclaim the 17,000 zones decisively and the next major hurdle would be around the 17,300 zones. The prevailing volatility is hard to trade. We thus suggest traders limit positions and wait for some stability. Investors, on the other hand, should use this phase to accumulate quality stocks on dips.
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