BackMarkets week ahead: These factors will drive market sentiments from Sept 12-16
In the coming trading sessions from September 12 to 16, the US Fed's ultra hawkish remarks coupled with expectations of a 75 basis points rate hike by the European Central Bank (ECB) is likely to play a key role in swaying markets globally including domestic equities.
PremiumMarkets week ahead: Sensex crossed the 60,000 mark and Nifty 50 surpassed 17,900 levels last week before pulling back due to profit-booking. Global cues edged higher as investors reassessed the outlook for monetary policy. In the coming trading sessions from September 12 to 16, the US Fed's ultra hawkish remarks coupled with expectations of a 75 basis points rate hike by the European Central Bank (ECB) is likely to play a key role in swaying markets globally including domestic equities. Macroeconomic data on inflation, manufacturing, and industrial production is also likely to influence sentiment.
Last week, on Friday, Sensex rose by 104.92 points or 0.18% to settle at 59,793.14. The 30-scrip benchmark made a strong start to climb up to 60,119.80 intraday high, however, corrected amidst profit booking after surpassing the 60,000-mark. Meanwhile, the Nifty 50 closed at 17,833.35 higher by 34.60 points or 0.19% after crossing the 17,925.95 intraday high. Banking and IT stocks outperformed, while capital goods and consumer durables stocks were laggards.
However, BSE-listed equity firms' market cap stood at nearly ₹283.04 lakh crore extending its fresh all-time high. On the previous day, the market cap was around ₹282.67 lakh crore.
Overall, in the week from September 5 to 9, both Sensex and Nifty 50 have advanced over 1% each.
Notably, on Friday, the rupee, however, appreciated by 12 paise to end at 9.57 against the US dollar on the back of an easing in the greenback, positive sentiments in domestic equities, and continued foreign funds inflow. Last week, some retreat was seen in the dollar ahead of US inflation data which will give better clarity on Fed's hawkish remarks.
As of September 9, this month, FPIs have pumped in ₹5,593 crore in the equity market, as per data from NSDL.
Also, in the week ending September 2, the country's forex reserves stood at $553.105 billion - declining by $7.941 billion compared to the previous week --- lowest since October 9, 2020.
What to expect from markets this week?
Vinod Nair, Head of Research at Geojit Financial Services said, "Bulls dominated domestic markets as the indices moved in tandem with developments in the global markets. Global indices edged higher as investors reassessed the outlook for monetary policy following ultra-hawkish remarks from the Fed chair and 75bps rate hikes by ECB."
Nair also added, "While the energy crisis in Europe continued to haunt investors, Chinese policymakers' renewed efforts to strengthen its economy boded well for the Chinese bourses. In an effort to stabilize declining oil prices, OPEC+ opted to cut back on the output given the faltering global growth outlook. Domestic investors held an upbeat outlook, bolstered by strengthening economic statistics, continued FII inflows, and rising corporate activity. Banking and consumption stocks remained top picks during the week."
The direction of the market in the week ahead will be determined by cues from the global markets as well as important macroeconomic data points, such as inflation and manufacturing & industrial production data, to be released next week. Domestic retail inflation is expected to rise to 6.9% in August from 6.71% in July."
India will announce its CPI inflation data for August and IIP data for July on September 12, while WPI inflation data will be presented on September 14.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd said, "We need to focus more on midcap and small-cap stocks. In the coming week, we are expecting profit taking in financial stocks and an outperformance in technology stocks."
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