Stock market to remain volatile this week

The stock market is likely to remain choppy as concerns over surge in oil prices, weak corporate earnings and uncertainties over upcoming general elections are playing on investor’s mind.

In the past week the market ended flattish over global growth slowdown fears and the focus has now shifted to the progress on US-China trade negotiations as both nations approach the timeline of March 1 for reaching an agreement.

Accumulation was seen on domestic index heavyweights after recent fall while mid & small cap outperformed. Metals, PSU Banks & Oil & Gas stocks witnessed strong rally last week.

“To weather the on-going volatility which may remain till middle of 2019 i.e. till central elections, it is ideal to have higher allocation into high earnings growth large-caps and mid-caps with strong management pedigree and reasonable valuations, says Teena Virmani, Vice President–Research, Kotak Securities.

According to analysts, the sentiment is sluggish which can be mainly attributed to the domestic feud between India and Pakistan, rising outflows by foreign portfolio investors, uncertainty over elections and the steep valuations.

According to technical analysts, Nifty 50 is still trading in the sideways band giving no clear signal.

“Given the breadth of the broader market is weak, there is every likelihood that higher levels will not sustain; 10,600 is a strong support for the index and if it is broken, markets will fall violently,” says Jimeet Modi, Founder & CEO, SAMCO Securities.

With the earnings season now over, the macros will take charge. Global as well domestic factors have a higher probability of driving the Indian bourses going ahead, but uncertainty will prevail given the political scenario in the country. Market participants are eagerly waiting for the announcement of election dates next week.

The GDP numbers for the fiscal year, the GST quarterly numbers along with fiscal deficit are due on Feb 28. The important numbers such as infrastructure output and Nikkei Market PMI numbers are also expected in the same week