The Indian markets ended the previous trading session on a strong note, reducing their weekly losses and sparking optimism among investors that the benchmark indices could extend their rally. This surge is primarily driven by the announcement of a 90-day pause on US tariffs. However, the ongoing US-China tariff war continues to add a layer of uncertainty, and the situation could significantly impact market volatility in the coming weeks.
Experts, like Puneet Singhania from Master Trust Group, warn that the market could face heightened volatility as the US and China continue to impose tariffs on each other. Investors are advised to keep a close watch on key economic data releases and corporate earnings scheduled for the week, as these could play a major role in shaping market sentiment.
Here are the three key factors that retail investors should track this week:
1. Inflation Data
India's March retail (CPI) and Wholesale Price Index (WPI) inflation data will be released on April 15. If inflation remains subdued, it could strengthen the case for the Reserve Bank of India (RBI) to maintain or even reduce interest rates to stimulate growth. The WPI and CPI numbers, along with foreign exchange reserves and passenger vehicle sales data, will be closely watched for any signs of economic pressure or recovery.
Meanwhile, the US will also release its March industrial production data on April 16. This will provide a snapshot of the health of the US manufacturing sector. On April 17, the US will announce the weekly Initial Jobless Claims report, an important early indicator of employment conditions. Any significant rise in jobless claims could prompt the Federal Reserve to consider rate cuts, potentially providing a boost to equity markets globally.
2. Key China Data
China's economic data on April 16 will be critical for global markets, particularly with Q1 GDP growth, March industrial production, and the unemployment rate set to be released. China’s mixed economic signals in recent months mean that strong data could help restore confidence in China's recovery. Such figures would also positively influence global commodity and industrial sectors, as they are closely tied to Chinese demand. Conversely, weaker-than-expected data could have the opposite effect, dampening sentiment globally.
3. Q4 Earnings
In India, several companies are scheduled to report their Q4 earnings this week, which could lead to stock-specific action. Notable companies reporting include Delta Corp, ICICI Lombard General Insurance, ICICI Prudential Life Insurance, and IREDA. These results could provide insights into the health of different sectors and influence market trends in the short term.
Nifty's Key Support and Resistance Levels
On the technical front, the Nifty 50 index showed a sharp recovery after a weak start last week, ending with only a 0.33% loss despite a significant gap-down. A "marubozu" candlestick on the weekly chart indicates buying interest at lower levels. However, the rise in India VIX (a volatility index) by 46% suggests that market volatility remains high. The Nifty is currently trading below crucial 21-day and 55-day Exponential Moving Averages (EMAs), signaling a potentially weak trend. Key support levels for the Nifty are at 22,500 and 22,200, while resistance lies near 23,050. Experts recommend a cautious approach in this volatile market, with a "sell-on-rise" strategy being favored until technical strength is confirmed.
Can Traders Expect Volatility?
With global central banks trying to balance inflation control with growth revival, the economic data and corporate earnings this week will be key in shaping market expectations. While there may be some relief for domestic equities after recent highs, the market is still navigating uncertainty. Volatility remains a concern, and retail investors are advised to stay cautious and keep a close eye on inflation data, Q4 earnings, US employment reports, and China’s economic performance.
In summary, while there is optimism around the US tariff pause, the market's direction will depend on the unfolding economic data and corporate earnings reports. Retail investors should monitor these factors carefully and adjust their strategies accordingly.
