What is your stock market outlook for trading on 21st February, Monday?

On the last day of the previous week, the Nifty index closed about 28 points lower at the end of a volatile day. The fears of an aggressive rate hike of nearly 50 bps by the Fed in March 2022 and the worsening geopolitical situation in Ukraine kept markets on tenterhooks. Unfortunately, the situation has only worsened over the weekend.

On Friday, the advance decline ratio was almost stable at 17:32 with pharma stocks under a lot of pressure. The VIX or volatility index of the market remains elevated at well above the 22 levels due to bouts of market uncertainty due to Ukraine and Fed hawkishness. Markets will face pressure at every bounce with VIX at such elevated levels.

FPIs net sold Rs.2,530 crore while domestic funds bought Rs.1,929 crore of equities on Friday. FPIs have taken out $8 billion since October 2021. Global cues were extremely negative with losses in the US and EU. American markets are shut on Monday on account of the birth anniversary of George Washington. SGX Nifty is 55 bps lower in early trades.

The big trigger for Monday will be the combination of bond yields, oil prices and the Ukrainian situation. With the quarterly results almost done, the focus now shifts entirely to the external macro triggers to drive markets. The overall market is likely to remain a sell-on-rises market for now and that is strategy that traders must adopt for now.