Sensex, Nifty this week: From bank loan growth to US jobs data, factors that may drive Dalal Street

Indian markets ended the week with healthy gains amid strong domestic macroeconomic data. India's Q3 GDP registered a higher-than-expected 8.4% growth on the back of good performance by the sectors such as construction, mining & quarrying, and manufacturing. 
This week India's bank loan growth and deposit growth data, HSBC Services PMI, and Foreign Exchange Reserves data, along with Fed Chair Powell's Testimony, Balance of Trade, and Unemployment Rate in the US are major events that will keep the markets buzzing.

Economic data: The coming week will be holiday-shortened as markets will remain closed on March 08 on the occasion of Mahashivratri. Traders will be looking for the HSBC Services PMI data for the month of February to be out on March 05 for more directional cues. Investors will also be eyeing Foreign Exchange Reserves data. 
Foreign Exchange Reserves in India increased to $619.070 billion on February 23 from $616.100 billion in the previous week. Besides, bank loan growth data and deposit growth data will be going to be out in the coming week. 

The value of loans in India increased 20.30 percent year-on-year in the fortnight to February 9, 2024.

US market data: On the global front, investors will be eyeing economic data from the United States, starting with the Fed Harker Speech on March 04 followed by S&P Global Composite PMI Final, S&P Global Services PMI Final, ISM Services PMI, Factory Orders, on March 05, JOLTs Job Openings on March 06, Balance of Trade, Initial Jobless Claims, Fed Chair Powell Testimony on March 07, Fed Williams Speech, Non-Farm Payrolls, Unemployment Rate, Baker Hughes Oil Rig Count on March 08.

Market performance: Vinod Nair, Head of Research, Geojit Financial Services says, At the onset of a week laden with economic data releases, investor sentiment appeared cautious. However, indices surged in the final session, propelled by stellar Indian GDP figures and a healthy performance in the Indian manufacturing sector as output and new orders picked up. while robust economic data boosted confidence in the Indian economy, concerns lingered regarding the RBI's policy decisions amidst high liquidity and inflation worries.

Nair further added that on the global front, in-line US personal consumption expenditure data and benign Eurozone inflation may influence global central banks to take a dovish view on interest rates. 

US bond yields dipped after the inflation data release, also supporting the equity market.

Banking stocks reversed initial weakness to perform well on the back of an improved economic outlook, while weakness persisted in the IT and pharma sectors, which are more closely tied to the global economy. 

“The release of additional data from the US, such as PMI and payroll data, along with inflation data from China, may influence market dynamics moving forward. Corrections in mid- and small-caps are underway and expected to continue, with regulators urging disclosure of associated risks to AMCs”, Nair said.

Market outlook

Nifty: According to Rupak De, Senior Technical & Derivative Analyst at LKP Securities, Nifty began on a positive note but struggled to withstand the selling pressure at higher levels, ultimately closing at the day's lowest point.

He added, although the overall sentiment remains positive, the index must surpass the 22,400 mark to trigger a new rally. “A decisive breakthrough above 22400 could propel the index towards 22600. On the downside, support is situated at 22250-22200”.

Bank Nifty: Bank Nifty remained range-bound throughout the day with low participation. Nevertheless, the overall sentiment remains positive as long as it stays above 42000. “A decisive breakthrough above 47500 could potentially propel the index towards 48200. On the downside, support is identified at 47000”, De said.