Macro data, FII, car sales data and other factors to consider

Markets this week: On Friday, benchmark indexes soared as the Reserve Bank of India hiked key policy rates in line with expectations. Both the Nifty and the Sensex ended the week up by more than 275 points, with the former settling at 17,094 and the latter at 57,426. On a weekly basis, key indexes finished in the red, with the Nifty and Sensex losing roughly 200 and 600 points, respectively.

On the economic front, market players will be looking forward to the S&P Global Manufacturing PMI on October 3 and the S&P Global Services PMI on October 6. Automobile and cement stocks will respond to monthly sales figures released at the start of the week. A large IPO is also on the way in the primary market. Electronics Mart India operates a consumer durables and electronics store called ‘Bajaj Electronics,’ and it plans to enter the main market to raise up to Rs 527 crore at a price range of Rs 56-59 per share.

On the global front, investors will be looking at economic data from the world’s largest economy, the United States (US), beginning with the S&P Global Manufacturing PMI Final on October 3, followed by the Balance of Trade on October 5, Initial Jobless Claims on October 6, and Unemployment Rate on October 7.

“An in-line rate rise coupled with the RBI’s confidence in the economy’s development momentum helped the domestic market stop a seven-year losing skid,” said investment expert Vinod Nair, head of research at Geojit Financial Services. The choice to retain inflation at 6.70% with a small decrease but a robust GDP prediction of 7.0% demonstrates the Indian economy’s resiliency. Although the message cautioned of current global economic dangers to the local economy, the MPC avoided seeming overly confrontational. The continuance of the policy position as ‘accommodative withdrawal’ suggests that additional rate rises are on the way, but only based on evidence.”

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The market will be closed on October 5th due to Dussehra, resulting in a truncated holiday week.

Macroeconomic Data

Domestic macroeconomic data will have an impact on the performance of Indian stocks. Gross collections from Goods and Services Tax (GST) increased by 26% year on year in September, reaching Rs 1,47,686 crore. Furthermore, the September Manufacturing and Services PMIs, which will be announced on October 3 and 6, will have an impact on the markets.

Car sales data

On October 1, monthly auto company sales figures for September were announced. Tata Motors recorded a 44% year-on-year growth in total domestic sales to 80,633 units during the past month, while Hero MotoCorp reported a 1.95% fall in overall sales to 519,980 units during the same month last year.

Rupee

The Indian rupee gained 50 paise versus the US dollar as a result of the RBI action, a stock market rise, and a dip in the dollar. On a weekly basis, however, the Indian rupee fell 36 paise to close at 81.35 versus the dollar, after plummeting to a record low of 81.95 over the week.

The rupee, which has lost 221 paise in the previous two and a half weeks, is anticipated to continue in the 80-82 zone in the coming days.

When local stocks go up and risk appetite goes up in European markets, the rupee tends to move higher. The rupee may benefit from a combination of a lower US currency and generally cheap crude oil prices. Concerns about the global economic recovery, however, may restrict a substantial gain,” said Anuj Choudhary, research analyst at BNP Paribas’ Sharekhan.

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FII flows

With increasing bond rates and increased policy tightening, foreign institutional investors (FIIs) have begun to withdraw funds from India once more. They sold about Rs 15.9 billion in net shares last week, bringing the monthly outflow to more than Rs 18.3 billion, compared to Rs 22 billion in purchases the previous month.

The atmosphere at FII’s desk will be monitored, and if the departure continues, the lead may narrow in the coming weeks, according to analysts.

Domestic institutional investors made up for FII withdrawal by purchasing more than Rs 14,000 crore in shares in the last month.

Oil prices

Investors will also keep an eye on petroleum prices, which fell below $100 per barrel in September and remained volatile amid mounting recession fears, prompting concerns about demand. According to Reuters, OPEC+ may reduce crude supply during their meeting on October 5.

During the week, international benchmark Brent oil prices slipped a dollar a barrel to $85.14. In the September quarter, the price corrected by 26%.

Clever technical perspective

“Nifty ended its losing skid as the index showed a gain after seven straight days of decline,” said Market Watcher Rupak De, Senior Technical Analyst at LKP Securities. It gained support at 16800 and climbed higher on the lower end. The index has produced a bullish engulfing pattern on the daily chart. The daily RSI has crossed into the positive territory. In the near term, the trend is likely to stay optimistic, with upside potential at 17300/17500. On the low end, 16950/16800 may continue to provide important short-term support.”

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