The current week will see a flurry of macro-economic data, which will decide the direction of the Indian stock market. Market participants will be eyeing the data of Index of Industrial Production (IIP) and the data of Consumer Price Index (CPI) which is scheduled to be released on October 12. On October 14, traders will track the Wholesale Price Index (WPI) data. Moreover, balance of trade (Export and Import) data and passenger vehicles sale will be released on December 15. Further, the deposit growth, bank loan growth and foreign exchange reserves data to be out on December 16.
Market watcher Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities said, “US S&P 500 Index recorded its worst return in five weeks, while the small-cap Russell 2000 Index endured its worst week since late September. Investors are waiting to hear what Chairman Powell says about the inflationary environment next Wednesday (14th December) when the two-day Federal Open Market Committee (FOMC) meeting wraps up. Markets ended lower last week, as the DJIA descended 2.8%, the S&P 500 fell 3.4%, and the Nasdaq Composite dropped 4.0%.”
“Weak Chinese trade data tempered optimism about China’s reopening. Its exports fell a bigger-than-forecast 8.7% in November from a year earlier, marking the steepest monthly drop in exports since February 2020. All eyes will be on the US fed as it wraps up a two-day FOMC meeting and pronounces its verdict on interest rates’ pace and magnitude. Global equity markets have turned lower from near-term resistance and we advise traders to remain vigilant on their long positions. Nifty is likely to find immediate support in the vicinity of 18400-18350 levels where Put options have been written. A move below 18350 can take the Nifty further down to the previous swing lows of 18133. Markets will turn bullish if Nifty manages to surpass 18665-18729 convincingly.” Mr. Vakil added.
On the global front, all eyes will be on US Federal Reserve’s Federal Open Market Committee (FOMC) meeting to be held on December 13-14 to decide on the magnitude of the next rate hike. Also, investors will be eyeing few economic data from United States (US), starting with Consumer Inflation Expectations on November 12, followed by monthly budget statement, core inflation rate, CPI, Redbook, on December 13, API crude oil stock change, Export & Import prices on December 14, retail sales, industrial production, business inventories on December 15 and Baker Hughes total rig count on December 16.
Investors will also track the 48th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, to be held on December 17 in a virtual format. Meanwhile, a meeting of the Development Working Group of the G20 Council will be held in Mumbai from December 13 to 16. In the primary market, automobile dealership chain Landmark Cars’ Rs 552 crore initial public offering (IPO) will open for public subscription on December 13 and will conclude on December 15.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “This week is crucial for equity markets globally since markets will be keenly waiting for the commentary of the Fed on 14th and that of ECB and BoE on 15th. However, the tone for the commentary of the central banks will be set by the US CPI data due on 13th. If the CPI data confirms a declining trend, the Fed can reaffirm its earlier comment of slowing down rate hikes, which will be interpreted by the market as a departure from the hawkish stance.”
“On the contrary, if the CPI data reflects stubborn inflation, the Fed will have no alternative but to remain hawkish. This will be negative for equity markets. The continuing rally in PSU bank stocks indicates interest in large scale buying in the segment. This segment which was under-owned for almost a decade is now coming back on improving fundamentals and attractive valuations even after the recent run up in prices.” he added.
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