Key factors that will guide market this week

Some important factors which may guide the market next week are:

Rapid rise in Coronavirus case: More disruptions of businesses in the coming days to contain the spreading virus is expected.Prolonged shutdowns leading to recession may not be far fetched imagination.

Crude price stabilisation: Last week crude prices fell by 20%. The US has announced a plan to increase crude stock to raise its strategic reserve to a maximum of 727 million barrels in the states of Louisiana and Texas. “With this announcement alone, they will lap up some 77 million barrels in the coming weeks and months, thus taking crude oil higher by 20 percent. If the US can do such smart maneuvering to stabilize commodity prices, it can be reasonably expected that equities too will soon find its feet,” experts opined. 

SEBI makes shorting tough: SEBI on 20th March halved position limits for certain stock futures, restricted short-selling of index derivatives and raised margin rates for some shares in a bid to curb "abnormally high" volatility amid the coronavirus pandemic. With SEBI's new curbs, more counters will come under the ban period as soon as the 95 percent limit is breached. However, there can be unintended consequences. The market is now oversold. Short covering may lead to sharp volatility. Also, when liquidity is low, selling in the cash market can lead to a crash in prices, according to experts.

FII selling: Foreign money managers are dumping blue chips in droves, hitting market sentiments. If they continue selling, which is likely as ETF redemptions have risen, the market can go further down.

Nifty expiry: March contracts of futures and options will expire on Thursday, which means the coming days could be volatile ones as traders will rush to either roll over or square their positions.

Technical point of view:Nifty index has moved too far too fast and became deep oversold hence bounces followed by selling emerging on the higher levels may be witnessed.