Markets this week: Benchmark indices showed exuberance on Friday after the Reserve Bank of India raised key policy rates on expected lines. Nifty racked up over 275 points to finish at 17,094, while Sensex climbed over 1,000 points to finish the week at 57,426. On a weekly basis, benchmarks ended in deep red territory as Nifty and Sensex posted losses of over 200 and 600 points, respectively.
The week ahead will be pivotal as market participants will pay attention to the economic side of the S&P Global Manufacturing, which will be released on October 3, and S&P Global Services PMI, which will be released on October 6. Auto and cement stocks will react to their monthly sales figures at the start of the week. An important IPO is also in the pipeline in the primary market. Electronics Mart India has a consumer durables and electronics store under the name ‘Bajaj Electronics’ and will enter the primary market to fetch up to Rs 527 crore in a price range of Rs 56-59 per share.
On the global front, investors will be looking at economic data from the world’s largest economy, the United States (US), starting with the S&P Global Manufacturing PMI Final on October 3, followed by the trade balance on October 5, the first unemployment claims on October 6. October, and finally the unemployment rate on October 7.
Investment strategist Vinod Nair, Head of Research at Geojit Financial Services said: “An in-line rate hike along with the RBI’s confidence in the economy’s growth momentum helped the domestic market break its seven-day losing streak. The decision to keep inflation at 6.70% with a marginal cut but a healthy GDP forecast of 7.0% indicates the resilience of the Indian economy. While the commentary warned of the prevailing risks to the global economy’s domestic economy, the MPC refrained from sounding very hawkish. Continuing the policy stance as ‘withdrawal of housing’ indicates more rate increases in the future, but data-driven.”
It will be a short holiday week as the market will remain closed on October 5 due to Dussehra.
Macroeconomic data
Domestic macro data will affect the price of Indian equities. Gross Goods and Services Tax (GST) revenues registered a 26% year-on-year growth in September, rising to Rs 1.47,686 crore. The manufacturing and services PMI for September, to be released on October 3-6, will also impact markets.
Automatic sales data
Monthly sales data by car companies for September was released on October 1. Mumbai-based Tata Motors reported a 44% year-over-year increase in total domestic sales of 80,633 units, while Hero MotoCorp reported a 1.95% drop in total sales to 5,19,980 units in the last month from 5,30. 346 units in the same month last year.
rupee
The Indian rupee appreciated by 50 paise against the US dollar following the movement of the RBI, the stock market rally and a decline in the dollar. On a weekly basis, however, the Indian currency weakened 36 paise to settle at 81.35 after falling to a record low of 81.95 against the dollar over the week.
The rupee, which has fallen by 221 paise in value in the past two and a half weeks, is expected to remain in the broad range of 80-82 levels in the coming days.
“We expect the rupee to trade positively amid a jump in domestic equities and increasing risk appetite in European markets. A weak US dollar and a generally weak tone in crude oil price may also support the rupee. However, concerns about the recovery of the global economy could mean a significant increase,” said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.
FII Streams
With rising bond yields and further policy tightening, foreign institutional investors (FIIs) have started withdrawing money from India again. They sold nearly Rs 15,900 crore in shares last week, bringing the monthly outflow to over Rs 18,300 crore from Rs 22,000 crore in purchases in the previous month.
The mood at the FII counter will be watched and if the outflow continues, the benefit could be limited in the coming weeks, experts say.
Domestic institutional investors managed to make up for the FII outflow, buying over Rs 14,000 crore of shares in the past month.
Oil prices
Investors will also monitor crude oil prices as oil traded below $100 a barrel in September and remained volatile amid mounting fears of a recession, raising concerns about the demand outlook. A Reuters report said OPEC+ could cut crude oil production at its Oct. 5 meeting.
International benchmark Brent oil futures fell $1 barrel over the course of the week to settle at $85.14. The price corrected 26 percent in the September quarter.
Helpful Technical Perspectives
Market Watcher Rupak De, Senior Technical Analyst at LKP Securities said: “Nifty broke its losing streak as the index posted gains after seven consecutive days of correction. On the downside, it found support at 16800 and moved up. On the daily chart, the index has formed a bullish engulfing pattern. The daily RSI appears to be entering the bullish crossover. Going forward, the trend may remain bullish with upside potential of 17300/17500. On the downside, 16950/16800 may continue to act as critical near-term support.
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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