What is your stock market trading view for Wednesday 23rd March and how do you see Nifty and Sensex after Tuesday’s bounce?

The markets on Tuesday were the exact opposite of the Monday correction. In fact, the Sensex rallied nearly 1000 points from the lows of the day on Tuesday. This more than offsetting the losses of Monday. Despite Brent Crude rallying higher to $115/bl, the Nifty rallied sharply led by auto, oil and IT stocks. However, war risk is still rampant.

In terms of market internals, the Nifty breadth indicator stood at 42:8 advance / decline ratio. The VIX has also tapered to the 24.02 levels, underplaying the volatility risk. The point of concern was the FMCG stocks, due to a combination of weak sales and margin pressures. However, IT, oil and metals continued to trade higher on Tuesday.

FPI flows were interestingly positive with a buy figure of Rs.384 crore on Tuesday even as domestic funds sold stocks worth Rs.602 crore. FPIs have now sold However, overall selling at Rs.41,822 crore in March alone out of the total equity selling of Rs.118,000 crore in FY22 so far. Dow, NASDAQ and Europe rallied on Tuesday, and SGX Nifty is 15 bps higher today.

For the short term there are certain clear headwinds for markets to worry about. The hawkish tone of the Fed was underlined by Powell in no uncertain terms in his recent speech. RBI cannot escape the hawkishness for long. The fall in FMCG stocks indicates that the problem of operating margins and input cost spike is real. Time to be cautious.