Banking stocks pull market down; analysts see Nifty heading to 23,000 soon

Equity benchmarks the Sensex and the Nifty snapped a two-day winning streak to trade lower on March 11 due to weakness in banking stocks.

Analysts, however, said the market would continue to scale new highs amid hopes of short covering in index futures by foreign and domestic investors.

The Sensex and Nifty declined up to 0.8 percent to 73,502 and 22,332. Fear gauge the India VIX spiked 2.8 percent to trade around 14.

"We expect Nifty to head towards 22,700 in the coming week as positive bias remains stable. We expect largecaps to continued with its relative outperformance against the broader market as ratio of Nifty vs Nifty 500 has bottomed out," analysts at ICICI Securities said.

Anand James, Chief Market Strategist, Geojit Financial Services, said that the stage is ready for Nifty to launch into 23,000-23,500 region.

"The intermediate challenge may be seen in the 22,550-600 region, while a direct fall below 22,410 could see 22,260, a close below which, falls towards 21,860 would become a potential outcome," he said.

Broader markets, too, bled on March 11, with Nifty Midcap 100 and Nifty Smallcap 100 indices slipping as much as 2 percent. Market experts expect this underperformance to continue in the near-term as Sebi urged mutual fund houses to set up an investor protection framework due to build-up of 'froth' in the small-and midcap space.

Barring Nifty Healthcare index, all others sectors drowned in the sea of red. Nifty Media index led the losses by declining over 2 percent, followed by Bank Nifty and Nifty Realty indices.

US inflation data eyed to map timing of rate cuts

Globally, market participants will watch out the US inflation report to understand how soon the Federal Reserve would start cutting interest rates.

According to reports, the consumer price index in US is expected to rise 0.3 percent in February from a month earlier after a 0.4 per cent advance to start the year.

Away from inflation, there are scant signs of stress in the economy. The latest jobs report pointed to moderating yet healthy employment growth that will keep consumer spending afloat.

Other US data in the coming week include February industrial production and the University of Michigan’s preliminary March consumer sentiment index.

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