Domestic markets are expected to open on weak note, tracking adverse global cues. As Russia-Ukraine conflict is yet to be resolved, global investors are resort to panic selling in equities. To add to India’s worry, crude oil price climbed above $106 a barrel.

According to the India Strategy report of Motilal Oswal Financial Services Limited (MOFSL), external risks continue to rise in CY22, with geopolitical events adding to the milieu.

Russia-Ukraine conflict

SGX Nifty at 16,490 signals a gap down opening of at least 300 points for Nifty, as Nifty futures on Monday closed at 16,794. However, Asia-Pacific stocks remain mixed with equities across Korea, Malaysia and Australia ruling positive (albeit marginal gains) while Taiwan and Nikkei markets slipping in early trade on Wednesday.

"The Russia-Ukraine conflict has resulted in a global risk-off, with equity markets undergoing intermittent bouts of correction and elevated volatility. The uncertainty over the duration and magnitude of the extant conflict could keep the market jittery and dependent on news flow. From India’s viewpoint, a sharp spike in crude oil prices (Brent crossed $100/barrel before retreating) poses key risks on the external balance front and can play spoilsport with the assumptions made in the FY23 Union Budget," MOFSL the report added.

Economic activity

Domestic economic activity also displayed some pressure points. GDP estimates of 5.4 per cent (lower than street expectation) for Q3 and the revision of FY22 GDP lower to 8.9 per cent by the Ministry of Statistics from 9.2 per cent. Analysts fear that if domestic inflation rises and the US Fed resorts to aggressive rate tightening, growth estimates may go further correction.

While automobile companies sales figures were mixed for February, GST collections continue to top ₹1.3 lakh crore.

Dr M Govinda Rao, Chief Economic Adviser at Brickwork Ratings, said, “The third wave largely impacted the economic activities in the fourth quarter (Q4). We expect the full fiscal growth may undergo revisions. Finally, the higher crude oil prices are also likely to adversely impact both growth and inflation.

Technical view

Technical analysts are seeing some optimism, after Monday's recovery in market.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said after showing an excellent comeback on Friday, Nifty displayed another attempt of sharp upside bounce from intraday lows on Monday and closed the day higher by 134 points amid a large intraday range.

A long bull candle was formed on the daily chart, that has engulfed the reasonable positive candle of previous session. The formation of lower shadow indicate buy on dips opportunity in the market. This is positive indication, he added.

"Nifty is currently placed at the edge of crucial overhead resistance of around 16800-17000 levels (previous swing lows and 200 day EMA)," according to Nagaraj Shetti.

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