25-Mar-2023
2 mins read
Indian Markets have been in the range for the past few days, with major swings witnessed in many sessions with massive gap ups and gap downs. The index has witnessed heavy volatility, but the range on the technical charts has been small. Domestic equities have undergone many events in the last few weeks and digested heavy negative news flows and a few positive news. The markets have already digested the Adani Issues, FIIs selling, SVB collapse, Credit Suisse, and now the Federal Reserve interest rate hike and their commentary for the future outlook. However, the range remains intact, and no major breakout or breakdown is witnessed on the daily charts.
It has been interesting to note that the indices have already witnessed big volatile issues but still are in the same range where the market expectations were expecting the markets to pick a trend either on the downside or the upside. There are various reasons for the markets to remain in a wait and watch situation, among which the domestic flows have contributed to the indices on every correction. If we go by figures, almost more than 35000 crores worth of shares have been sold by foreign investors in the current calendar year, while on the flip side, the same selling was well absorbed by the domestic investors or DIIS, which have bought almost more than the same worth of shares in the same period. This indicates that the domestic flows and the retail participation are good to support the markets on any kind of shocks at the lower levels.
Secondly, the other reason for the market to remain in the range is the ongoing confusion from the US central bank Federal Reserve, which has yet to decide whether they want to tackle inflation or save the banking system in the near future. Until now, the statements from the US central bankers have created a lot of confusion among global investors. Fed Chair Powell has been focussing on inflations while Jannet Yellen, the Secretary of the Treasury, has been giving hawkish statements concerning the ongoing banking crisis in the US. So, investors are still in the midst of making up their minds whether the world is moving towards recession, bank crisis, or now the liquidity will start to ease again if the Federal Reserve starts cutting the rates from the next meeting.
Among the other factors, the tussle concerning the ongoing Russia-Ukraine has kept the investors on their toes, followed by the Chinese reopening, which is giving some hope that the global markets will get some relief from the supply chain issues and, again, the growth will be on track. On the flip side, the numbers on the domestic side have been encouraging where the GST numbers came in better than expected; the rural and urban consumption is showing some green shoes in the first three months of the current calendar year. This is also supporting the markets at the lower levels.
So, after looking at the aforementioned factors, it is seen that the markets are in mid of the big breakdown or the breakout move, and soon one-sided movement will be triggered in the global markets. The trigger may come from any news or event from the world or the domestic side, which the market participants await.
As investors, it is obvious that the volatility gives them an excellent opportunity to enter the markets regularly, but the same volatility gives different outcomes for the traders. It is difficult for traders to digest the current ups and downs. It is a kind of rough phase which one has to tackle and surpass as a trader and then ride the trend once it emerges.
So, be ready for the markets to decide the trend in the near term, as we expect the market is at the end of the current consolidation, and the movement will gather momentum in a single direction. Depending on the market sentiments, the direction can be on either side, but the movement will be fast and in a single direction in the upcoming weeks.