Bull against bear: After witnessing a number of volatile sessions last week, the 50 Nifty Stock Index consolidated within a wide range of 15,900-16,400 for the week, but rebounded from expiration day lows and continued momentum in the last trading session to finish above 16,350 with gains of more than half a percent. Over the last three weeks, the index has been consolidating within a wide range and Nifty has finished at the upper end of the range. However, the relative outperformance of the Bank Nifty Index was encouraging and it has already broken through its resistance on expiry day and continued its outperformance.
Now, if we look at the sector indices, Nifty IT has shown signs of a retracement move from its support, while the Nifty Midcap 100 Index has also reversed from its previous low supports. Therefore, it becomes important for traders and investors to know the main triggers that may dictate the Indian stock market next week.
Speaking about the factors that may affect Dalal Street’s move next week, Anuj Gupta, Research Vice President at IIFL Securities, said: “The pullback in the last market session should be seen as a relief rally and one should remain vigilant for major triggers like the dollar index move, the European Central Bank interest rate hike, India GDP data, China manufacturing data, and US non-farm payroll and employment data. , etc.
Here we list the top 5 triggers that may affect the stock market next week:
1]Dollar Index: The dollar index has eased further to around 101 after climbing to a 20-year high two weeks ago. The move in the dollar index on either side will decide the fate of global markets, including India.
“If the dollar index falls further, it may disrupt the FII sell-off, while a bounce in the index from here may accelerate the FII sell-off further,” said Anuj Gupta of IIFL Securities.
2]Indian GDP: “There are mixed projections on India’s GDP number. Moody’s recently cut India’s GDP growth forecast from 9% to 8.8% due to rising inflation. This number is still higher than the projection RBI of 7.2%. Perhaps an official announcement sometime next week regarding the GDP forecast for this fiscal year will have some impact on the markets,” said Sonam Srivastava, founder of Wright Research.
3]Chinese manufacturing data: This will be an important event that a market investor cannot miss. “China is in a deflationary phase and is cutting rates. This has led to a massive drop in its 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 maybe even follow up on this event as it is bound to drive market conditions,” said Sonam Srivastava.
4]European Central Bank: Following the aggressive stance of the US Fed on raising the interest rate, there is much speculation that the European Central Bank could raise the interest rate. If this happens, it will be a big dent in global equity markets as IIFs may decide to move into the euro after dollar profit-taking, said Anuj Gupta of IIFL Securities.
5]US Non-Farm Payroll and Employment Data: This release is expected on Friday of next week. In the event of disappointing numbers, there may be a strong sell-off in global markets as speculations of a slowdown in the US economy may be fueled by such weak numbers.
Disclaimer: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of the Mint.