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After a roller-coaster ride last week, the market is expected to trade with caution this week as investors focus on domestic and global macro-economic data in addition to the last leg of the quarterly earnings and inflows from foreign institutional investors.
“Indian market is likely to decouple at least in the short-term with the rest of the global peers in the light of demonetisation of higher value currency notes. Dow Jones has raced ahead to make a new high but Nifty is struggling,” said Jimeet Modi, CEO, SAMCO Securities.
“Market has entered a long phase of corrective pattern trying to correct the entire rise from the March bottoms. 8,000 level on the index, therefore, will act as a solid support on the lower side. However, a 38% retracement level which comes to 8,200 could also act as a minor support. Traders should refrain from creating long positions and investors should stay on the sidelines till a capitulation in the correction is reached," he added.
Market is closed today on account of Guru Nanak Jayanti.
Below are six events that will set the market tone this week:
Industrial production data
Country’s factory output grew 0.7% in September, recovering only marginally from the previous month’s fall of (-) 0.7%, data released on Friday showed. Experts believe thanks to festive demand, the October output figures, to be released next month, could come out better, but are unlikely to see significant pick up in the coming months hit by an unexpected ban on Rs 500 and Rs 1000 currency notes.
“While a gradual improvement in consumer sector production can be expected on the back of pay commission payouts and monsoon-led rural demand, we need to be cautious on the degree of demand slowdown due to the recent demonetisation measures in a significantly high cash economy,” said Suvodeep Rakshit, Economist, Kotak Institutional Equities.
Inflation data
Key macro inflation data points - Consumer Price Index (CPI) and Wholesale Price Index (WPI) are expected to be released on Tuesday. The inflation figures will be closely in focus especially with RBI (Reserve Bank of India) scheduled to announce monetary policy early December. A Citigroup report last week estimated that retail inflation may soften to 4.1% in October and ease further to sub-4% level by November-December, largely helped by favourable base effect.
Last leg of earnings season
In perhaps the last big batch of earnings, a total of 881 BSE-listed companies will announce their September quarter results next week. The list includes Tata Motors, NHP, Godrej Industries, India Cements, Shree Renuka Sugars, Aurobindo Pharma, Coffee Day Enterprises, Ramco Cement and Welspun India, among others.
Fischer comment
In his first remarks after Republican Donald Trump won the US presidential election, Stanley Fischer, the second-in-command at Federal Reserve said US economic growth prospects appear strong enough for the Fed to proceed with gradual interest rate rises. The Fed Vice Chair, however, added that the central bank will keep an eye on rising long-term government borrowing costs.
"Of course we will watch events and depending on how the market turns out and how the economy turns out we will adjust our policy if we think that's necessary," Fischer said.
Rupee trajectory and FII investment
On Friday, the rupee breached the 67 mark to end at over three-month low level of 67.25 against the US currency on fears of capital outflows amid rate hike worries in US in December and development on the demonetisation front back home. Foreign portfolio investors have, meanwhile, sold equities worth Rs 1,670.71 crore from November 7-11, figures from the National Securities Depository (NSDL) suggested.
Global data
On the global front, the US industrial production data and the US crude stocks will be key data to watch, which will get declared on Wednesday. Investors will also keep a watch on Japanese GDP and euro zone’s industrial production and GDP numbers on Tuesday, data on Chinese housing prices will be released on Friday.
