The monetary policy outcome of the Reserve Bank of India (RBI), movement of the Indian rupee and inflow of funds are expected to set the trend for the Indian equity markets during the trade week starting April 3.
Besides, the release of major global data, such as the minutes of the Federal Open Market Committee (FOMC) meeting in March, coupled with domestic macro-data — Manufacturing Purchasing Managers' Index (PMI) for March 2017 — will also influence the movement of the key Indian indices.
Market observers opined that the major domestic event in the upcoming week is the RBI's monetary policy meeting scheduled on April 6.
"The market would closely watch any development by the RBI in its monetary policy meeting which is scheduled on April 5-6. The RBI is likely to keep key interest rates unchanged. Actually, the RBI has shifted to a neutral stance from accommodative in February and this may prompt the central bank to hold rates," said D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors.
"On the back of ample liquidity with local and foreign institutional investors (FIIs), it is expected that domestic market would continue to move higher."
In terms of investments, provisional figures from the stock exchanges showed that FIIs purchased stocks worth Rs.7,226.29 crore during the week, while domestic institutional investors (DIIs) bought scrips worth Rs.4,245.98 crore.
Figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) bought equities worth Rs.9,058.41 crore, or $1.39 billion, during March 27-31.
"Important cues that the investors will closely follow in the near term would be global markets' sentiments and quarterly results, while price movement of the Indian rupee against the USD (US Dollar) will be the crucial factor for market sentiments next week," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
However, Desai expected the equity markets to trade with volatile sentiments due to profit-booking at higher levels in the coming sessions.
On March 31 last week, the Indian rupee strengthened by 56 paise to 64.85 against a US dollar.
According to Vijay Singhania, founder and Director of brokerage firm Trade Smart Online, the rupee posted one of its best gains last week.
"The rupee climbed 0.1 per cent to close at 64.85 per dollar in Mumbai last week on Friday, taking its gain to 2.8 per cent in March 2017. The three-month advance is the biggest for any quarter since the period ended September 2012," said Singhania.
"Markit Economics will announce the India Manufacturing Purchasing Managers' Index (PMI) data for March 2017 on Monday. It will also unveil the result of a monthly survey on the performance of India's services sector in March on Thursday."
The Nikkei Manufacturing PMI in India rose to 50.7 in February of 2017 from 50.4 in January 2017.
"On the global front, the (US) FOMC March meeting minutes will be released on March 29. The Federal Reserve raised the target range for its federal funds by 25 basis points from 0.75 per cent to 1 per cent during its March 2017 meeting," he added.
On technical levels, Deepak Jasani, Head – Retail Research, HDFC Securities, explained: "Technically, with the markets resuming the uptrend after the weakness seen last week, traders will need to watch if the Nifty can now hold above the intermediate supports of 9,024 for the uptrend to continue."
During the week ended March 31, continuous inflow of funds and a strong rupee pulled the Indian equity markets from lower levels to close with marginal gains.
Investors' sentiments were buoyed on the passage of the Goods and Services Tax Bill 2017 — a major tax reform in the country — and healthy roll-overs seen on the expiry of March 2017 series contracts in the futures and options (F&O) segment to April 2017 series.
The barometer 30-scrip Sensitive Index (Sensex) of the BSE rose by 199.10 points or 0.68 per cent to close at 29,620.50 points, while the NSE Nifty closed at 9,173.75 points — up 65.75 points or 0.72 per cent.