How do you see the stock markets panning out on Monday 04th April, and do you the Friday rally in Nifty continuing?

In a way, FY23 began with a bang with the Nifty gaining over 200 points and the Sensex gaining 708 points on Friday. It was largely a mix of short covering and selected buying that pushed the markets to a higher trajectory. The rupee has shown strength in recent days and that has also helped the markets, especially after the Rouble gold peg.

In terms of market structure, the A/D ratio was extremely favourable at 40:9. However, the good news was that the volatility index represented by VIX, tapered sharply lower to the 18.44 levels. It does look like the uncertainty related to the war and oil dynamics are out of the way or have been largely factored in. This makes it a buy on dips type of market.

Foreign investors net bought stocks worth Rs.1,910 crore as domestic funds sold Rs.184 crore on Friday. FPIs sold Rs.140,010 crore net but the irony was that the Nifty closed the with 18.9% gains. Global markets like the Dow, NASDAQ and the European markets were flat to positive SGX Nifty is trading 20 bps lower in early trades, awaiting a decisive trend.

Fiscal FY23 has started on a strong note but the real challenge emanates from the Fed minutes and the RBI monetary policy to be announced later this week. Both are key macro indicators and will set the tone for stock market direction in the coming week. It remains to be seen how the RBI reacts and fine tunes its policy in response to the Fed.