Domestic equity markets ended the current week on the downside as volatility hit and indices turned tough. However, broader markets such as mid-cap and small-cap indices gained as much as 2 percent.
Weak global cues, dovish Fed expectations and profit booking kept investors on their toes. The lack of key directional cues also helped volatility take over.
At the sector level, IT emerged as the biggest laggard, followed by pharmaceuticals. However, government lenders stole the show, followed by media and energy stocks.
Nifty is taking a breather after a phenomenal rally and is currently trading in a tight 17,300 to 17,800 range. It would be crucial to see how our markets react to the US slump on Monday, said Ajit Mishra, VP – Research, Broking.
“We reiterate our view that we should focus more on risk management in this corrective phase and suggest continuing with a stock-specific trading approach until the Nifty resumes trending,” he added.
Below are the seven key factors that could guide the markets this week:
Jackson Hole Symposium
Speaking in Jackson Hole, Wyoming, Federal Reserve Chairman Jerome Powell made it clear that the central bank is committed to taming inflation through growth and is willing to keep interest rates high to counter rising prices to fight.
His stiff and hawkish speech sent US indexes down as much as 4 percent on Friday and Indian markets could feel the wrath of the sharp drop as well. Indian markets will react to his comment on Monday.
India’s GDP numbers
India will release its GDP figures for the June quarter of 2022 next week on Wednesday. India’s economy likely grew 15.1% in the first quarter of FY23, according to a Reuters poll, helped by a favorable base and a revival in services as all Covid restrictions were lifted.
Ahead of the GDP numbers, India would grow 7.4 percent in the current fiscal year (fiscal 2022-23) and remain at the same level in the next fiscal year, Union Finance Minister Nirmala Sitharaman predicted on Friday.
Reliance Industries Annual General Meeting
Reliance Industries, the largest publicly traded company on Indian bourses, will hold its 44th Annual General Meeting (AGM) on Monday 29th August and Dalal Street would eagerly await what Mukesh Ambani will announce to investors.
Market expects an update on the company’s roadmap for success, 5G rollout and future roadmap for the renewable energy business. However, as ET Now reports, an update on the demerger or IPOs of the retail and telecom business is unlikely.
car sales figures
The markets are reacting well to the sales figures of the auto companies for the month of August. The first month of the second half of this year has been a mixed bag for automakers as markets hope for a pre-holiday recovery.
In July, two-wheeler sales grew slightly, while passenger and commercial vehicles saw solid growth. However, improving inventories and new launches will support auto sales after a dull monsoon season.
FII flows
Indian equity markets continue to see foreign inflows amid rising bond yields and a stronger dollar as FPIs weathered an eight-month losing streak and more than Rs.45,000 flowed into domestic equity markets.
FPIs are now buying stocks in financials, capital goods, FMCG and telecoms. FPIs are buying into India amid a stronger dollar, reflecting their confidence in the Indian economy, said VK Vijayakumar, chief investment strategist at
.
“The Fed’s ultra-hawkish stance in Jackson Hole is negative for equity markets in the near term. This could impact FPI flows in the near-term, he added.
US Unemployment Claims
Initial Jobless Claims measures the number of people who have filed for unemployment insurance for the first time in the past week. This data would be closely watched to track the strength of the world’s largest economy.
Technical Outlook
The Nifty50 index ended on a negative note after a bearish evening star candlestick pattern formed on a weekly timeframe. The near-term trend is still bullish, but at the same time the market still remains above medians, so upside potential is likely limited, said Apurva Sheth, Head of Market Perspectives, Samco Securities.
“We believe levels around 17,400 on the Nifty will likely serve as a make or break level. A break below this level could result in a retest of the 17,100 level. Until then, traders should have a slightly bullish outlook,” he added.
(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)
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