Market Ahead Podcast, Aug 30: Factors that could guide markets this week

In a tussle between the bulls and bears, the former so far has managed to have an upper hand, with only small bouts of profit-taking visible here and there. What many assumed to be the 'beginning of a crash' turned out to be a ‘healthy correction inside a larger bull market. 

The Sensex and Nifty are making new all-time highs each week on the expected performance of the economy, and therefore, of the corporates. But this week could be the deciding factor as a host of macroeconomic data is lined up for release and that will help decide if the market is overestimating the pace of recovery.

First and foremost, a reaction to the US Federal Reserve chair Jerome Powell's address at Jackson Hole Symposium can be expected when the markets open for trade on Monday. The Fed commentary will also have a bearing on FPI flows going ahead who already have turned somewhat cautious on the Indian markets, with a mere investment of Rs 986 crore so far in August.

Although, soon thereafter the focus will shift to the Q1 GDP print for the financial year 2021-22 slated to be out on Tuesday, August 31.

According to an SBI research report, the GDP is expected to grow at around 18.5 per cent in the first quarter of the current financial year. This estimate is lower than the Reserve Bank of India's GDP growth projection of 21.4 per cent for the April-June quarter. Meanwhile, Acuite Ratings pegs GDP growth at 22-23 per cent for Q1 on the back of a severe contraction a year ago and recovery in economic activities towards the end of the quarter. Any disappointment on the growth front could send markets in a tailspin.

That apart, the India Manufacturing PMI and Services are also up for release this week on September 1 and September 3, respectively. Both figures had improved in July on a month-on-month basis. Furthermore, the auto stocks will be on investors' radar as the sales figures for August will start trickling in next week.  

The action will return to the primary markets as two new issues -- Ami Organics and Vijaya Diagnostic -- are lined up to open on September 1. Ami Organics looks to raise Rs 570 crore via a mix of fresh issue and offer for sale. It is priced in the range of Rs 603-610 per share. Vijaya Diagnostics's Rs 1,894 crore IPO is entirely an offer for sale and priced in the band of Rs 522-531 per share. Analysts at Angel Broking have assigned Neutral Rating to both these issues.

Lastly, oil price movement, rupee's trajectory and stock moves will also sway market direction.

The benchmark indices had ended the volatile last week on a positive note but the gains were concentrated in select stocks, suggesting the polarised nature of the market. Analysts believe investors should continue to buy into quality names on dips.