Market Ahead Podcast, Sep 20: Factors that could guide markets this week

The two-day monetary policy meeting of the US Federal Reserve will dictate global market trends this week.

Jerome Powell-led US Fed is set to meet on September 21 and 22, i.e. Tuesday and Wednesday, but market watchers expect the meeting to be a ‘non-event’.

A Reuters’ poll has revealed that US economists expect the Federal Reserve to announce an impending policy shift in November, instead of September, due to disappointing jobs data, and an unexpected dent to the economic recovery in Q3.

The knock-on-effect of the US Fed’s decision may also affect forex markets where the greenback may depreciate further if there is no announcement of tapering. This, in turn, would lift the Indian rupee.

Back home, primary market activity will keep investors busy during the week.

Defence equipment manufacturer, Paras Defence and Space Technologies, will open its initial public offer tomorrow for three days.

The price band for the IPO is Rs 165-175 per share and, at the top end, the company looks to raise Rs 171 crore.

That apart, Sansera Engineering is expected to debut on the bourses later this week.

Remember, the IPO closed last week with over 11 times subscription and bids worth more than Rs 10,000 crore.

Outcome of GST Council Meeting, stock-specific news flow, pick up in vaccination drive, and foreign fund activity will also guide markets this week.

Domestic markets had scaled fresh lifetime highs last Friday with the BSE Sensex hitting 59,737-mark and the Nifty50 claiming 17,793.

The indices, however, ended sharply lower amid profit booking in PSU bank stocks.

Shares of Punjab National Bank, Bank of Baroda, Bank of India, and SBI dropped between 2-5% as investors read the fine print of soon-to-be set up Bad Bank.

The move is being hailed as a 'structurally positive development', but analysts believe it is a little “late in the cycle.”

Besides, they also fear that a delayed resolution may dent the asset's value over time.

Financially, analysts opine that since most of the bad loans are fully provided for, there may not be any significant improvement in NPA ratios.

Given this, movement in related stocks will be tracked today.