Stock Market Weekly Outlook: How Will Sensex, and Nifty React From March 18-21? Fed Meet Eyed

Stock Market Week Ahead: Heightened trade war tensions are likely to keep the stock market on a loop, coupled with consistent FII outflows and repercussions of U.S. tariffs on India Inc, which could add further to the woes during the trading week from March 18 to March 21st. The upcoming Q4 earnings season will also play a role in driving sentiment. Also, a host of key macroeconomic releases such as India WPI inflation, US job data, FED and Bank of England rate decisions and US core retail sales among others. Sensex and Nifty both declined between 0.5% and 0.7% last week, dragged by global trends, IT stocks and FII selloffs.

Last week, on March 13, the Sensex closed at 73,828.91, down by 200.85 points or 0.27%. While Nifty 50 plunged by 73.30 points or 0.33% to end at 22,397.20. Bank Nifty held above 48,060 levels but with a mild upside. Sensex and Nifty are in a bearish tone since March 7th. Sensex has dipped by 0.7% and Nifty is down by 0.5%.

According to Puneet Singhania, Director at Master Trust Group, the Indian equity markets resumed their downward trajectory after a brief recovery last week. The Nifty 50 and Sensex declined by approximately 0.7%, closing at 22,397 and 73,828, respectively. Investor sentiment was weighed down by escalating trade tensions, which pose a risk to global economic recovery. Concerns over persistent FII outflows and the potential repercussions of U.S. tariffs on India Inc. further dampened market confidence, raising uncertainty over Q4 earnings.

He further added that the broader market also exhibited weakness, with Small-cap and Mid-cap indices tumbling nearly 4% and 2%, respectively. Sectorally, the IT index led the decline, followed by banking and new-age sectors. Meanwhile, consumer confidence continued to erode amid rising inflation and economic uncertainty. The Consumer Sentiment Index dropped to 57.9 in mid-March from 64.7 in February, reflecting a 27% year-over-year decline and its lowest level since 2022. On the institutional front, FIIs recorded net outflows of ₹5,729 crore in the cash segment, while DIIs infused ₹5,499 crore, providing some stability to the market.

Stock Market Weekly Outlook:

In the upcoming week, the market will be impacted by key macroeconomic data releases. Focus will be on US Fed Interest Rate Decision, India WPI Inflation, US Core Retail Sales (MoM) (Feb), US Initial Jobless Claims, US Existing Home Sales (Feb), UK BoE Interest Rate Decision (Mar) and UK Unemployment Rate (Jan).

Ajit Mishra - SVP, Research, Religare Broking said, "looking ahead, all eyes are on the US Federal Reserve's monetary policy review scheduled for March 19. While recent inflation data suggests a favorable trend, the possibility of an interest rate cut remains uncertain due to ongoing trade tensions however their commentary would be crucial."

Back home, Mishra added, market participants will closely monitor FII activity, as selling pressure from foreign investors has intensified once again after a brief slowdown. Any improvement on this front could provide some relief to the markets.

Technical Outlook:

Singhania said, that Nifty closed negative this week and is currently trading above its 100-week EMA, which is near 22,000, while remaining below the 21-day EMA. This suggests a "sell on rising" market sentiment. The RSI is also trading below its 14-day SMA at 38, indicating weak momentum. Immediate support is at 22,300, and a breach below this level could trigger further selling towards 22,000. On the upside, 22,630 is a crucial resistance level, and a breakout above it may lead to an upmove toward 22,800. A bearish outlook remains favorable unless the index decisively closes above its 21-day EMA.

While Mishra said, Nifty remains in a consolidation phase, trading within a tight range of 22,250 to 22,650. A decisive breakout could drive the index towards 23,100 or higher, while a breakdown may lead to a retest of 21,800.

On the banking stocks, Singhania said, Bank Nifty is hovering around its horizontal support zone, which aligns with the 100-week EMA at 47,526. The index closed negative and remains below both the 21-day and 55-day EMAs, indicating a weak trend. Immediate resistance is placed at 48,600, aligning with the 21-day EMA, and a breakout above this level could push the index toward 48,200. The daily RSI stands at 38, reflecting weak momentum. On the downside, support is at 47,500, and a breach below this level may extend selling pressure towards 47,000. Given the current technical setup, a "sell on rise" strategy remains favorable near resistance levels.

Also, Mishra said, the banking sector has shown resilience, but the Bank Nifty needs a strong close above its 20-day exponential moving average at 48,600 to regain strength and test the 50,000 mark. On the downside, a breach of 47,500 could trigger a sharp correction.

Investment Strategy:

Given the ongoing market consolidation, traders are advised to focus on option strategies in index until a clear breakout emerges. At the same time, stock-specific approach remains prudent, with a preference for financials, energy, and metals on the long side, while IT and auto sectors may continue to underperform, as per Mishra.

Additionally, Mishra said, "caution is warranted in broader markets, as heightened volatility could lead to further underperformance. Investors are advised to avoid aggressive positioning in mid and small-cap stocks."