Geopolitical developments, macro data to set tone for equity markets this week: Analysts

On Friday, benchmark indices Sensex and Nifty rebounded up to 2.5%, a day after suffering their worst session in about two years

The Russia-Ukraine conflict, which has spooked financial markets globally, will set the tone for Dalal Street this week amid concerns over energy prices and foreign fund outflows, analysts said.

Participants will also track key macroeconomic signals like GDP estimates and PMI data for manufacturing and services sectors to be announced this week, they added.

"With earnings season behind us and given the overall sentiments, markets are expected to move in sync with global peers in the coming week.

"A close eye will be kept on the developments concerning the Russia - Ukraine crisis and considering the inflation overhang, market participants will also observe movements in energy prices," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.

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On Friday, benchmark indices Sensex and Nifty rebounded up to 2.5 per cent, a day after suffering their worst session in about two years, amid bargain hunting by participants.

The 30-share BSE Sensex climbed 1,328.61 points or 2.44 per cent to settle at 55,858.52. Similarly, the broader NSE Nifty soared 410.45 points or 2.53 per cent to 16,658.40.

On a weekly basis, however, the Sensex lost 1,974 points or 3.41 per cent and the Nifty gave up 618 points or 3.57 per cent.

Experts believe while markets have seen a pullback, volatility is expected to remain high over the next few days.

"Market will be keeping a close watch on the ongoing Russia - Ukraine conflict over the weekend for any further cues. For the near term, Thursday's low of 16200 may act as a strong support.

"While traders need to remain cautious of sharp volatility, investors can use the current dip to gradually add quality blue-chip companies in their portfolios," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Besides, auto shares will be in focus as automobile companies will start announcing their monthly sales numbers for February from March 1 onwards.

Moreover, market participants will be awaiting cues from domestic macroeconomic numbers. The National Statistical Office (NSO) will declare the GDP estimates for Q3 FY 2021-22 on February 28.

On the global front, Russia has unleashed a wave of attacks on Ukraine targeting airfields and fuel facilities in what appeared to be the next phase of its invasion. The US and EU have responded with weapons and ammunition for the outnumbered Ukrainians and powerful sanctions on Russia.

"While the developments on the Russia-Ukraine front will keep influencing the directions of the market, resumption of supply disruptions and commodity inflation will hurt a lot of economies at a time when they were starting to recover post Omicron threat," said Deepak Jasani, Head of Retail Research, HDFC Securities.

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