Indian stock indices ended a volatile week with small cuts on Nov. 2 as concerns about the US Federal Reserve’s rate hike trajectory and lower-than-expected June GDP growth weighed on sentiment. The Nifty 50 and Sensex ended the week ending Sept. 2 with marginal losses after US Federal Reserve Chief Jerome Powell reiterated the central bank’s commitment to curb runaway inflation and suggested another 75 basis point rate hike during the next meeting could be justified .
Experts said that in the absence of major domestic events, stock markets will be driven by global trends, foreign money flows and movement in Brent crude. The key global events this week are the European Central Bank’s interest rate decision and inflation in China, she added.
There is not much on the domestic front to process, therefore the direction of global markets will play an important role in the direction of our market,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
In addition, the services sector PMI (Purchasing Managers’ Index) data for August, expected on Monday, will also affect trading.
“If there isn’t a major event, attendees will be watching global markets for signals. In addition, the trend of foreign flows will be on their radar,” said Ajit Mishra, VP Research, Religare Broking Ltd.
FII Streams
After pouring in over Rs 51,000 crore in Indian equities last month, FII flow has been erratic over the past two trading days amid rising dollar index and US bond yields.
Dr VK Vijayakumar of Geojit Financial Services said FIIs are likely to continue investing in India. “They’ve learned that getting out is easy, but getting in is expensive,” he said.
Macros
After growing 13.5% in real GDP in the June quarter, India surpassed the UK to become the fifth largest economy in the world. India’s PMI data will be released on Monday. Investors would also look to the US PMI data and the first data on US jobless claims for more clues. On September 8, the European Central Bank will announce its interest rate decision.
Investors around the world will also keep a close eye on inflation figures in China.
rupee
Currency market volatility can take its toll on stock market sentiment. After foreign equity market participation dried up last week in response to aggressive comments from the US Fed, the rupee ended the week on a weaker note against the US dollar. The US Dollar Index has recently seen a rally, moving to a 20-year high against a basket of major currencies last week.
“We expect the rupee to remain weak against the US dollar due to concerns about the new COVID-19 lockdown in parts of China. Concerns about the global economic slowdown and the overall strength of the dollar could also put downward pressure on the rupee,” said Anuj Chaudhary, research analyst at Sharekhan.
F&O Directions
On the Option front, we saw a maximum open call rate at 17,500 strike, followed by 18,000 strike, with call writing at 17,600 strike and then 17,500 strike, while the maximum open rate at 16,000 strike and 16,500 strike, with put writing at 17,600 strike followed by 16,000 strike.
The options data above indicated that the Nifty may remain in an immediate trading range of 17,500-18,000 levels.
The banking index gained more than one percent in the past week, forming a bullish candlestick pattern on the weekly scale. So if the index closes above 40,000, there could be an upward trend towards record highs, experts say.
Helpful Technical Perspectives
Apurva Sheth, Head of Market Perspectives, Samco Securities said that technically the Nifty50 index started the week with a big decline, following negative signals from international indices, but regained most of its losses. It closed slightly negative/unchanged. After a sharp rise from 15,200 to 18,000, the benchmark is now consolidating.
Right now, the 17,150 level is likely to serve as a key support zone, according to the Samco Securities analyst, who recommends traders maintain a bullish bias and buy on dips as long as the said support is protected.
The expert opinions and investment tips in this News18.com report are their own and not the website’s or its management. Users are advised to contact certified experts before making any investment decisions.
Disclaimer: The expert opinions and investment tips contained in this News18.com report are their own and not the website’s or its management. Users are advised to contact certified experts before making any investment decisions.
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