Macro-data to drive equity markets (Market Outlook)

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Mumbai, Sep 11 (IANS) Key macro-economic data, coupled with trends in global indices and the pace of foreign funds inflow, are expected to drive the trajectory of the Indian equity markets during the upcoming week.

“Next week is front loaded with CPI (consumer price index) and IIP (Index of Industrial Production) data,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

Key macro-economic data such as the factory output — IIP — for July and inflation figures for August are expected to be released on Monday.

These data points will be followed the release of WPI (Wholesale Price Index) numbers.

“The inflation figure is keenly awaited to see if there are chances of RBI (Reserve Bank of India) governor cutting rates in his first monetary policy meeting after assuming office,” James said.

As per D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors: “There is a strong assumption that market will continue to move upwards.”

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“Upcoming major macro-economic data, crude oil prices and rupee movement, coupled with trends in global indices and the pace of foreign funds inflow, will dictate the trend of the global markets in the coming weeks.”

Besides, an important factor which is expected to determine the markets movement will be the pace of foreign funds inflow.

Provisional figures from the stock exchanges showed that the week ended September 9 witnessed an inflow of Rs 2,088.95 crore.

“Investors will closely follow important cues like FIIs (Foreign Institutional Investors) fund inflow in Indian equity markets and markets’ strength and sustainability at higher levels,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

“Indian equity markets are likely to trade in a volatile manner due to profit booking at higher levels in the coming sessions. Auto and pharma sector stocks are likely to trade firm on support of strong fundamentals.”

On the global front, Indian investors will look out for crude oil price movement and the outcome of the US Fed’s FOMC (Federal Open Market Committee) meet.

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“The markets would be influenced by global risk and liquidity. Remarks by a voting member of US Federal Reserve on fed hikes have led to the fear of hikes coming in sooner,” said Devendra Nevgi, Chief Executive of ZyFin Advisors.

“The Fed meeting this month remains the focal point of the global markets and risk aversion.”

Last week, a slew of data from the US had lessened the possibility of a rate hike when the FOMC meets September 20-21.

A hike in US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India.

It is also expected to dent business margins as access to capital from the US will become expensive.

In addition, the Indian rupee, which showed firm movement last week, is also expected to be closely tracked. The rupee closed at 66.68 against a US dollar on Friday.

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According to Hiren Sharma, Senior Vice President and Head-Forex Advisory at Anand Rathi Financial Services, “the range of 66.66 (66.50/32) to 67.06/10 (66.25) remains intact”.

For the week ended September 9, the key indices maintained their upward trajectory by rising more than half a percentage each.

However, some gains were capped as investors turned picky on their investments and chose to book profits on Friday.

The 30-scrip sensitive index (Sensex) of the BSE, which had touched a new 17-month closing high on Thursday, ended the week’s trade with an appreciable gain of 265.14 points or 0.93 per cent at 28,797.25 points.

Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) edged up 57.05 points or 0.65 per cent to close at 8,866.70 points. The Nifty had touched its new 18-month closing high last week.

(Rohit Vaid can be contacted at [email protected])



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