In the week ended March 16, stock markets tumbled even though the start of the week with gains of 600 points on the Sensex suggested a win for the benchmark indices on a weekly basis. However, against expectations Nifty and Sensex shed 0.31% and 0.39% respectively to end the week at 10,195 and 33,176.
So, how will the Indian stock market fare next week and what all will lay its impetus on it is discussed hereforth:
Global trade war concerns
On the global front, trade war fears envisaged by Donald Trump with tariffs on aluminum and steel are expected to further dull the sentiment. Also came in the news that U.S. investigation was invoked against the Trump Organization
Meanwhile Indian stock market will also be influenced greatly by the uncertain political environment after TDP (Telagu Desham Party) moves a no-confidence motion and withdrew support to BJP at this crucial time. And it is suggested that until the assembly election happen next year in India, politics would weigh down economics when it comes to driving stock market action.
Federal Reserve Monetary Policy meet on Wednesday:
March 20 and 21, 2018 are slated for Federal Reserve's Monetary policy meet (FOMC). This shall be the first meet after Jerome Powell come to power and as the economic indicators suggest positive outlook with employment number improving as also a steady increase in price, the US may decide on a rate hike of 25 basis points.
Earlier, the Federal Bank has forecast three rate increases for this year.
Any rate hike guidance in the FOMC meet in the US will give direction to the stock markets back in India in the week ahead.
The pressure is likely to continue as the financial year end liquidity crunch weighs on the capital markets plus the country is witness to political turmoil which is significant given the general assembly elections scheduled next year. Also, other concern such as LTCG implications on gains of over Rs. 1 lakh @ 10% from April 1, 2018 on equity sale is adding to the sell-off.