The market lost around half a per cent in the week ended October 7 amid volatile but rangebound trade, as fears of a recession in the developed countries, mixed corporate earnings and weak economic data at home affected sentiment.
The Sensex fell 271 points to 57,920, and the Nifty slipped 129 points to 17,186 in the week. The broader market took a bigger hit. The Nifty Midcap 100 index declined 2.8 per cent and the smallcap 100 index was down 1.7 per cent.
This week is going to be crucial for the stock market as it will be heavily loaded with macroeconomic data and announcements of quarterly results by some major companies. On the economic front, market participants will closely watch the deposit growth and bank loan growth data which are scheduled to be released on October 21.
Besides, movement of the rupee and trend in international oil benchmark Brent crude will also influence trading, they added.
“Market will look for direction from Q2 earnings and global cues. This week many financial and cement companies will come out with their Q2 results. Global markets are quite volatile, which may lead to volatility in our market as well,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Q2 Results
Earnings and global cues will dictate the trend this week. First, participants will react to HDFC Bank’s number in early trade on Monday, experts said.
“Going ahead, we have some prominent names like ACC, Ultratech Cement, IndusInd Bank, Axis Bank, Asian Paints, Bajaj Finance, ITC and Hindustan Unilever who will announce their numbers along with several others,” said Ajit Mishra, VP – Research, Religare Broking Ltd.
Global Cues
The US industrial production and manufacturing data for September will be released on October 18, which will give an indication of the factory activity in the world’s largest economy as the Federal Reserve continues to aggressive policy tightening.
The United States Industrial Production in August declined 0.2 percent from the previous month, missing expectations.
The Chinese economic growth for the quarter ended September 30, 2022 (Q3 CY22), industrial production and retail sales for September will also be important, indicating the health of the world’s second largest economy.
Rupee
Given the upward trend of the dollar amid global macroeconomic concerns, the movement of the currency in the coming week will be closely monitored by investors. The rupee on Friday ended at a record closing low of 82.3500 a dollar. So far in October, the dollar index has risen 1 per cent.
FII Flow
Foreign institutional investors have been taking out their money from emerging markets including India as central banks, including Federal Reserve, raise rates to tame inflation.
They have net sold nearly Rs 10,000 crore worth of shares in October so far, but domestic institutional investors have managed to absorb the selling pressure to a large extent by buying equities worth more than Rs 8,000 crore during the period.
Given the rising US bond yields and elevated US dollar index on expectations of faster rate hikes, FII flow is expected be volatile in the short term, which may cap the upside of the market, experts said.
Nifty Technical Outlook
Despite some smart gains on Friday, Nifty failed to close above its previous week’s range. For the last three weeks, the index has been trading in a range of 16,800-17,350 levels amid volatility.
The candles for the last three weeks have tall wicks on both ends, which indicates indecision among the traders due to volatility, said Apurva Sheth, head of market perspectives at Samco Securities.
Follow-up buying is expected as Nifty sustained above 17,100 levels, which could take it towards 17,500 soon, Sheth said. On the lower side, 16,800 will act as an important support in the coming trading sessions.
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