D-Street cheers BJP win in 4 states, snaps 4-week losing streak

Bulls came back in action after four weeks of the selloff on Dalal Street as investors preferred to go for bargain buying in quality stocks amid the victory of the Bharatiya Janata Party (BJP) in four out of five state polls. The benchmark BSE Sensex advanced 2.24 per cent to 55,550.30 on March 11, 2022 from 54,333.81 on March 4, 2022. Likewise, the 50-share Nifty index gained 2.37 per cent to 16.630.45 during the same period.

As many as 39 stocks in the Nifty index settled the week in green with Cipla gaining the most at 12.11 per cent. It was followed by Indian Oil Corporation (up 9.23 per cent), Sun Pharmaceutical Industries (up 8.72 per cent), Asian Paints (up 7.08 per cent) and Tata Consumer Products (up 6.94 per cent).

On the other hand, Britannia Industries, Axis Bank, Eicher Motors, Maruti Suzuki and ICICI Bank dipped between 1 per cent and 5 per cent.

Sectorwise, the BSE Healthcare and Telecom indices jumped over 5 per cent during the week. The BSE IT, Realty, FMCG, Metal and Oil & Gas also advanced between 2 per cent and 5 per cent. Broader indices the BSE Midcap and BSE Smallcap gained 3.06 per cent and 3.25 per cent, respectively.

Overall, the equity market kicked off the week on a tepid note as the Russia-Ukraine conflict coupled with rising crude oil prices dragged markets lower. Meanwhile, selling by foreign institutional investors (FIIs) and falling rupee weighed sentiment. However, investors gave thumbs up to election results where BJP won in four out of five states.

Vinod Nair, head of research, Geojit Financial Services said, “The domestic market opened weak, witnessing a heavy sell-off as oil prices surged above $130 a barrel for the 1st time since July 2008, following the risk of the US and European ban on Russia’s oil export. However, the mood was reversed as the results of the state election turned positive for the market and oil prices started cooling off.”

“Indian markets witnessed increased optimism in the progress of high-level talks between Russia and Ukraine and a surge in the global markets. US CPI inflation recorded a 40-year high due to high gasoline, food and housing cost, adding doubts to the global trend. Inflation levels in India and abroad are poised to rise even higher in March, though temporarily, considering the impact of the Russia-Ukraine issue,” Nair added.

In the forthcoming week, market participants would be eyeing the data of the Consumer Price Index (CPI) which is scheduled to be released on March 14. The annual inflation rate in India increased to a 7-month high of 6.01 per cent in January of 2022 from an upwardly revised 5.66 per cent in December. On the same day, Wholesale Price Index (WPI) data for February, is scheduled to release. WPI rate in India fell to 12.96 per cent in January 2022 from 13.56 per cent a month earlier.

Balance of Trade, Import and Export data will also be released on March 15. India’s trade deficit widened to $21.2 billion in February of 2022, from $13.1 billion in the same period last year

Nair added that next week the market will focus on the reduction of commodity prices and diplomatic development between Russia and Ukraine.  

“If these global trends turn positive, the performance of the Indian market will be good or else it may get choppy. The market will also focus on inflation data to be released in India and US, and US Fed and BoE meeting is scheduled for next week,” he added.

Chartist Manish Shah of Nifty Triggers said, “Nifty forms a good quality “bullish engulfing” pattern on the weekly time frame. This is a bullish trend reversal pattern it could denote that a low of substantial magnitude is in place. Furthermore, the price action also shows that there was a temporary break below the low of December 12 when Nifty traded below the low and promptly reversed from the low breakout point. On the weekly time frame, Nifty is forming a bullish AB=CD harmonic pattern and this pattern does suggest a possibility of a rally to 17500 odd levels.”