Global cues such as caution ahead of a US interest-rate decision as well as developments surrounding international trade tensions are expected to determine the trajectory of major domestic equity indices.
“It is expected that the market would continue to track each development related to the trade war, FOMC (the US Fed’s Federal Open Market Committee) interest rate meeting and actions of newly appointed RBI governor,” said SMC Investments and Advisors’ Chairman and Managing Director DK Aggarwal.
Consequently, investors will remain cautious over the possibility of any impending hike in the US interest rates which can potentially drive away Foreign Portfolio Investors (FPIs) from emerging markets such as India.
Last week’s provisional data from exchanges showed that foreign institutional investors (FIIs) became net sellers, as they off-loaded a total of Rs 2,067.19 crore worth of shares.
“Indices are likely to face renewed pressure after last week’s rally. US Fed’s interest rate decision is likely to be the key event driving the markets,” said Sahil Kapoor, Chief Market Strategist, Edelweiss Investment Research.
“Domestic markets are now factoring in a looser monetary policy with the appointment of new RBI governor.”
The FOMC will meet on Wednesday. Its decision, along with trade data released after the market hours on Friday (December 14) and volatility in crude oil prices are expected to impact the Indian rupee and in turn the broader market sentiment.
“This (trade deficit) number was a bit subdued against expectations… Crude prices are expected to harden a bit which may lead to some mild depreciation in the rupee… Broad range for next week is seen from 71.60 to 72.30,” said Edelweiss Securities’ Head of Forex and Rates Sajal Gupta.
On a weekly basis, the Indian rupee strengthened by 1.1 to 71.90 against the US dollar from its previous week’s close of 70.80 to a greenback.
Apart from the currency movements, developments surrounding the winter session of parliament will have a bearing on the market.
“Developments during the month-long winter session of parliament and any announcements by the government will impact the markets in the near term,” said Viral Berawala, CIO, Essel Mutual Fund.
On technical charts, further upside in the National Stock Exchange (NSE) Nifty50 is likely after the index crosses the immediate resistance level of 10,941 points.
“Technically, with the Nifty rallying higher for the fourth consecutive session, the bulls remain in control,” HDFC Securities’ Retail Research Head Deepak Jasani told IANS.
“Further upsides are likely in the coming week once the immediate resistances of 10,941 points are taken out. Crucial supports to watch for any weakness are at 10,588 points.”
The key equity indices had ended last week on a firm note as the expectation of lower interest rates and further liquidity infusion by the Reserve Bank of India (RBI) under its new chief, along with healthy macroeconomic data points had buoyed investor sentiments.
The S&P (Bombay Stock Exchange) BSE Sensex had gained 289.68 points, or 0.81 per cent, to close at 35,962.93 points for the week ended December 14, whereas the 50-share NSE Nifty advanced 111.75 points, or 1.04 per cent, to settle at 10,805.45 points.