Market outlook for the week (24-Mar to 28-Mar)

24 Mar 2025 , 09:28 AM

SECTORAL STORY FOR THE WEEK TO MARCH 21, 2025

The week to March 21, 2025 saw Nifty and Sensex rallying sharply by +4.26% and +4.16% respectively. During the week, FPIs were net sellers of $(194) Million in Indian equities, as selling started to taper. Here are the 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (21-Mar)	Index (14-Mar)
Nifty Capital Markets	13.92%	3,336.10	2,928.40
Nifty India Defence	10.47%	6,248.00	5,655.90
Nifty Non-Banks	7.96%	26,198.50	24,266.00
Nifty Realty	7.82%	862.75	800.15
Nifty Healthcare	7.16%	14,011.90	13,075.75
Nifty CPSE	6.51%	6,085.90	5,713.75
Nifty Mobility	6.14%	18,694.30	17,612.25
Nifty PSU Banks	6.00%	6,130.95	5,783.85
Nifty India Digital	5.99%	8,305.30	7,836.00
Nifty Automobiles	5.85%	21,756.00	20,554.05
Nifty Chemicals	5.77%	27,917.73	26,393.94
Nifty Infrastructure	5.63%	8,386.70	7,939.75
Nifty Private Banks	5.33%	25,232.70	23,955.70
Nifty Banks	5.27%	50,593.55	48,060.40
Nifty Oil & Gas	5.21%	10,544.20	10,021.80
Nifty Metals	4.85%	9,203.55	8,777.65
Nifty Consumer Durables	4.81%	36,250.40	34,585.75
Nifty MNC	3.77%	26,239.50	25,286.80
Nifty FMCG	2.13%	52,986.05	51,879.25
Nifty IT	1.61%	36,702.80	36,122.50

Data Source: NSE

Here are key takeaways from weekly sectoral returns.

• In contrast to the previous week, all 20 sectoral indices gave positive returns. Sectors that showed strength were Capital Markets, Defence, NBFCs, Realty, and Healthcare. IT and FMCG were relatively subdued; although they still delivered positive returns.
• A total of 15 out of 20 sectors rallied more than 5% returns this week. Out of these 15 sectors; 2 sectors delivered double digit returns, 5 sectors delivered more than 7% returns and 8 sectors gave over 6% returns for the week.
• The weekly arithmetic average of returns of the 20 sectors stood at +6.11%. The bottom 10 sectors delivered +4.44%, while top-10 delivered +7.78%. The broad-based sectoral rally was due to large caps, mid-caps and small caps rallying uniformly.

Nifty VIX trended lower at 12.58 levels. The week saw some pick up in volumes and could pick up further with SEBI easing some of the earlier norms that had kept investors away.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

Let us first look at the positive triggers. Firstly, the trade deficit mellowed to just $14.05 Billion in Feb-25, resulting in overall trade surplus of $4.43 Billion (including services). That bodes well for keeping CAD in check. Secondly, the Fed has hinted at opening the liquidity gates by cutting bond buybacks and printing more dollars. Forget about the long term impact, the short-term impact on markets could be salutary.

However, there were some negative triggers too this week. The WPI inflation inched up to 2.38% this week, but the real worry was on the spike in manufacturing cost inflation. Secondly, the quarterly macro projections update of the Fed has cut the US GDP growth forecast for 2025 by 40 bps to 1.7% and upped core inflation by 30 bps to 2.8%. The big question is if there is appetite for mega IPOs like Tata Capital and LG Electronics India.

STOCK MARKET TRIGGERS FOR COMING WEEK TO MARCH 28, 2025

Here are key triggers that could influence stock markets next week.

• For the coming week, the big domestic data point will be the Q3 current account deficit. Apart from the absolute number (which is likely to be higher due to the November 2024 effect), the CAD as percentage of GDP is likely to be closer to 2% for Q3. However, for FY25, the CAD is still likely to be mellowed at around 1.5% of GDP.
• All eyes will be on the two critical parameters of the USDINR and the Brent Crude prices. While the USDINR rallied by nearly ₹1 this week, it may be tough to sustain if FPI inflows do not show up. Last week, Brent crude had rallied to $72.5/bbl, and with growth hopes coming back, that could be a problem area for the USDINR.
• The US economy is likely to see some key data points this week. The US Q4 GDP second estimate is expected this week and may give the first hint of a sharp slowdown. Also, the PCE inflation for Feb-25 will be announced by the US Bureau of Economic Analysis (BEA) this week, with a high probability of a spike in core PCE inflation.
• Key global data points. PCE inflation, Q4GDP, FOMC speak, Building Permits, New Home Sales, oil inventories, durable goods orders, and jobless claims (US). PMI, EU Economic Forecasts (EU); PMI, Core CPI, BOJ Minutes (Japan); PMI, CPI, PPI, GDP, Retail Sales (UK).

What does this mean for Nifty and Sensex in the coming week to March 28, 2025.

PARTING THOUGHTS ON MARKET INDEX LEVELS

For the coming week, there are 3 things to observe.

• VIX trended lower at 12.58 levels compared to 13.27 last week. However, with dwindling market volumes, VIX is becoming less representative of the fear factor.
• Nifty closed the week at 23,350 Spot. Going ahead, 22,918 and 23,728 will be the key support and resistance levels for the Nifty from a positional perspective.
• Most IPO issues are on hold for the last one month, and this week we could see some announcements on big upcoming IPOs like LG Electronics India and Tata Capital.

The big X-factor for India is the outcome of the reciprocal tariffs in early April. For now, the markets appeared to have stabilized, but that is more on global liquidity hopes. Indian markets will need a more solid India-specific story now!