Stock market outlook: 10 key factors to watch this week on Dalal Street

The Indian stock market ended the truncated week on a subdued note, with benchmark indices closing lower following a rangebound trading session. The Nifty 50 slipped by 155 points to settle at 22,397, while the BSE Sensex declined 504 points to end at 73,829. Broader market indices bore the brunt of the correction, with the Nifty Midcap 100 and Smallcap 250 falling 2.2 percent and 3.5 percent, respectively.

Despite concerns over a potential US recession and escalating global trade tensions, market losses were cushioned by positive domestic factors such as easing consumer inflation, robust industrial output, favorable crude oil prices, and a weaker US dollar index.

Looking ahead, market sentiment is expected to remain rangebound, with volatility driven by upcoming global and domestic events. Analysts suggest that sector rotation and global market cues will play a significant role in shaping investor decisions.

Key factors to watch next week:

1. US Fed’s Interest Rate Decision

The Federal Open Market Committee (FOMC) is set to announce its interest rate decision on March 19. Market participants anticipate that the Fed will keep the benchmark federal funds rate unchanged at 4.25-4.50 percent. Fed Chair Jerome Powell’s commentary on jobs data, economic growth, inflation trends, and future rate cuts will be crucial. Additionally, concerns over tariffs imposed by the Trump administration and their impact on inflation will be monitored closely.

2. Bank of England and Bank of Japan Policy Decisions

Apart from the Fed, the Bank of England and Bank of Japan will also announce their interest rate policies on March 19 and March 20, respectively. Market experts expect the Bank of England to maintain the rate at 4.5 percent, while the Bank of Japan is likely to keep its policy rate unchanged at 0.5 percent.

3. Global Economic Data

Investors will track key economic indicators from China, including retail sales and industrial production data. Any signs of economic weakness may prompt swift government intervention. Additionally, US retail sales, industrial production numbers, and Q4 current account data will be closely monitored. Inflation figures from the Eurozone and Japan will also be on investors’ radar.

4. Oil and Gold Prices

Commodity markets will be under scrutiny, particularly crude oil and gold prices. Brent crude rebounded slightly last week, closing at $70.58 per barrel, amid tighter sanctions on Iran and Russia. Meanwhile, COMEX gold prices surged past the $3,000 mark per troy ounce for the first time, driven by economic slowdown fears and geopolitical uncertainties.

5. Domestic Economic Indicators

India’s WPI inflation and balance of trade data for February are due on March 17. Experts predict a marginal increase in WPI inflation from the 2.31 percent reported in January. Additionally, foreign exchange reserves data for the week ended March 14 will be released on March 21. India’s forex reserves had risen by $15.26 billion to $653.97 billion in the previous week.

6. Foreign Institutional Investor (FII) Activity

FIIs continued their selling spree in Indian equities, with a net outflow of Rs 5,729.7 crore last week, taking the total March outflow to Rs 21,231 crore. However, domestic institutional investors (DIIs) helped cushion the impact, with net purchases worth Rs 5,500 crore during the week.

7. IPO Activity

The primary market will witness action in the SME segment, with Paradeep Parivahan and Divine Hira Jewellers launching their IPOs on March 17. PDP Shipping & Projects and Super Iron Foundry are set to debut on the BSE SME platform on March 18 and March 19, respectively.

8. Technical Outlook

The Nifty 50 is expected to trade within the 22,250-22,700 range in the coming week. A decisive breakout on either side will determine the market’s future direction. On the higher side, 23,000 remains a key resistance level, while 22,000 serves as strong support. Analysts believe that bearish sentiment still prevails, given that the index is trading below key moving averages.

9. Derivatives Market Trends

Options data indicates that the Nifty 50 may trade within a broad range of 22,000-23,000. The 23,000 strike holds the highest call open interest, followed by the 22,500 and 22,700 strikes. On the put side, maximum open interest is observed at the 22,000 and 21,500 levels.

10. Market Volatility

India VIX, the fear index, declined for the fourth consecutive week, closing at 13.28, down 1.4 percent. The low volatility indicates limited downside risks, favoring market bulls.