Sensex, Nifty this week: From India’s fiscal deficit to GDP growth, factors that may drive Dalal Street

Indian equity markets ended the last week with gains of over half a percent amid positive signals from the HSBC Flash PMI Survey. HSBC's India Composite PMI rose to 61.5 in February from January's final reading of 61.2, marking an expansion for the 31st straight month.

This week, India's fiscal deficit, GDP, and core sector data are likely to keep the markets buzzing. Besides these, US GDP data and trade balance are also likely to drive the markets.

Economic data: This week, traders will be eyeing India's fiscal deficit data, which is slated to be released on February 29. On the same day, Gross Domestic Product (GDP) data and core sector data going to be released. Investors will also be eyeing the HSBC Manufacturing PMI Final, scheduled to be released on March 1. On the same day, Foreign Exchange Reserves data will be released. Additionally, auto companies would grab some attention, as they will announce their monthly sales figures.

US market data: On the global front, investors will be eyeing economic data from the US, starting with the Dallas Fed Manufacturing Index on February 26, Durable Goods Orders, Richmond Fed Manufacturing Index on February 27, GDP Growth Rate, Goods Trade Balance on February 28, Core PCE Price Index, Personal Income, Personal Spending, and Fed Goolsbee Speech on February 29, S&P Global Manufacturing PMI Final, ISM Manufacturing PMI, ISM Manufacturing Employment on March 1.  

FII investments: Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says an interesting feature of the FPI trend recently is the decline in equity outflows despite the rising bond yields in the US. "Normally when the US 10-year yield rises above 4.15%, the FPIs sell heavily. But this is not happening now. Since the DIIs, HNIs, and retail investors are the dominant players now and their sustained buying is pushing the market to newer records, FPIs have taken a backseat."

"In February through 23rd FPIs had net sold equity only for Rs 423 crores, sharply down from the January level. The resilience of the market is preventing the FPIs from selling aggressively despite attractive bond yields in the US. In debt, FPIs continue to be buyers having bought debt worth Rs 18,589 crores in February so far," Vijayakumar said.

Market outlook 

Nifty erased early gains to end marginally lower on Feb 23 after the Nifty hit a record high for the fifth consecutive session. At close, Nifty was down 0.02 per cent or 4.8 points at 22,212. Large trading activity was seen in Reliance Group, Vodafone-Idea, and IndusInd Bank stocks. 

Market veteran Deepak Jasani, Head of Retail Research at HDFC Securities, says global shares firmed on Friday, capping a record-breaking week after US chipmaker Nvidia's blockbuster earnings energised tech stocks, powering key benchmarks across the world to new highs. German GDP fell 0.3 per cent in the fourth quarter compared to the previous quarter.

"Nifty ended almost flat on Feb 23. After repeatedly making fresh highs, the Nifty failed to show follow-through buying/rise. On a weekly basis, Nifty rose 0.78 per cent.  Nifty could now face resistance at 22,280 and a breach of this could take it to 22,810. On falls, it could take support at 22,011 and later at 21,832," Jasani said.

Bank Nifty: Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, says the Bank Nifty maintained its robust momentum, breaking past the 46,500 level, which is now established as a formidable support. Any retracement towards this support zone presents an ideal opportunity to initiate long positions, targeting an upside of 48,000.

“The immediate hurdle for the Bank Nifty index is situated at 47,100, and a conclusive break above this level would signify a resumption of the uptrend toward the mentioned targets of 48,000," Shah added.