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Bull vs bear: After witnessing series of volatile sessions last week, 50 stocks index Nifty consolidated within a broad range of 15,900 to 16,400 during the week, but it recovered from the lows on the expiry day and continued the momentum on the last trading session to end above 16,350 with gains of over half a percent. In last three weeks, the index has consolidated within a broad range and Nifty has ended around the higher end of the range. However, the relative outperformance from the Bank Nifty index was encouraging and it has already given a breakout from its resistance on the expiry day and has continued its outperformance.
Now if we look at the sectoral indices, Nifty IT has shown signs of pullback move from its support while the Nifty Midcap 100 index too has reversed from its previous swing low supports. So, it becomes important for the traders and investors to know major triggers that may dictate Indian stock market next week.
Speaking on the factors that may impact Dalal Street movement next week, Anuj Gupta, Vice President — Research at IIFL Securities said, "Pull-back in last session of the market should be seen as relief rally and one needs to remain vigilant about the major triggers like dollar index movement, European Central Bank on interest rate hike, Indian GDP data, Chinese manufacturing data and US non-farm payrolls and employment data, etc."
Here we list out top 5 triggers that may impact stock market next week:
1] Dollar index: Dollar index has further eased and it has come around 101 after scaling to 20 years high two weeks ago. Movement in dollar index on either side will decide fate of global markets including India.
"If dollar index comes down further, it may put breaks on FIIs selling whereas a rebound in the index from here may further accelerate FIIs selling," said Anuj Gupta of IIFL Securities.
2] India's GDP: "There are varied projections about India’s GDP number. Recently, Moody’s cut India’s GDP growth forecast to 8.8% from 9.% due to rising inflation. This number is still higher than RBI’s projection of 7.2%. Perhaps, an official announcement sometime next week in regard to the GDP forecast for this fiscal will have a certain impact on the markets," said Sonam Srivastava, Founder at Wright Research.
3] Chinese manufacturing data: This will be a major event that a market investor can't afford to miss out. "China is in a deflationary phase and cutting rates. This has led to a massive decline in their currency and as a result, major global hedge funds are dumping Chinese stocks. This affects all emerging markets and India is no different. A close watch and perhaps even monitoring needs to be done on this event as it is bound to drive market conditions," Sonam Srivastava said.
4] European Central Bank: Following US Fed's hawkish stance on interest rate hike, speculations are high that European Central Bank may enhance interest rate. If this happens, it will be a big dent to global equity markets as FIIs may decided to move towards euro after profit-taking in dollar, said Anuj Gupta of IIFL Securities.
5] US non-farm payrolls and employment data: This release is expected on Friday next week. In case of disappointing numbers, there can be sharp selling across global markets as speculations about slowdown in the US economy may get a boost from such weak numbers.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
