Karnataka results to provide direction

Despite rising crude oil prices and weakening of rupee against the dollar, the markets, buoyed by good Q4 earnings, easing of geopolitical tensions and lower than expected US inflation, which eased investor fears of fast interest rate hikes by the US Fed, resumed the upward movement to close higher during the week ended.

The Sensex gained 620.41 points or 1.78 per cent to close at 35,536 and the Nifty ended higher by 188 points or 1.77 per cent to settle at 10,806.

Underperforming the benchmark indices, the BSE Mid- Cap index fell 217.02 points or 1.31 per cent and the BSE SmallCap index fell 173.36 points or 0.96 per cent. The breadth of the market remained weak amidst high volumes.

It is pertinent to observe that in the current fiscal year, FIIs are seen on the sell side in both equities and debt market. However, DIIs continued to be net buyers and were seen supporting the markets at lower levels.

Anticipating a win for the BJP- led NDA, the markets, ahead of Karnataka polls, defied the weak rupee and the rising crude oil prices to stay firm.

After a prolonged period of low prices and relative calm, oil watchers are predicting a surge of volatility following Trump’s move to re- impose sanctions on Iran. Analysts are already warning of an eventual return to $ 100 oil.

The near- term trend will be dictated by the outcome of the Karnataka polls, macro data, investment by FIIs and DIIs, movement of rupee, crude oil prices and global cues.

For the week ahead, chartists predict range of 35,500- 36,000 and 10,65010,960 for the indices.