During the past week, Indian markets closed with losses as Crude Oil remained above the $90 mark, raising concerns about inflation. Additionally, continuous foreign fund outflows negatively impacted market sentiment. Looking ahead to the next week, investors will closely monitor important data releases, including the RBI’s Interest Rate Decision, Bank Loan Growth, Deposit Growth figures, as well as the Balance of Trade and Unemployment Rate in the United States, which are expected to have a significant impact on market dynamics.
Here’s a breakdown of the upcoming economic events:
Macro Data: The upcoming week is crucial, marking the start of a new month and bringing a plethora of macroeconomic data that will influence market trends. Early in the week, the performance of auto and cement stocks will be influenced by their monthly sales figures. Traders will also keep a close watch on the release of S&P Global Manufacturing PMI data on October 3rd, followed by the S&P Global Composite PMI and S&P Global Services PMI on October 5th. In addition, key data points such as the RBI Interest Rate Decision, Cash Reserve Ratio, Foreign Exchange Reserves, Bank Loan Growth, and Deposit Growth are scheduled for release on September 6th.
GST Council Meeting: Notably, the 52nd meeting of the GST Council, chaired by the Union Finance Minister and comprising state ministers, is set to convene on October 7th, 2023, at Vigyan Bhawan, New Delhi.
US Market Data: Globally, market participants will closely monitor economic data from the world’s largest economy, the United States. This includes events such as the S&P Global Manufacturing PMI and ISM Manufacturing Employment on October 2nd, followed by Redbook and JOLTs Job Openings on October 3rd. Subsequently, on October 4th, the release of the S&P Global Composite PMI, ISM Services PMI, ISM Services Employment, and Factory Orders will be watched closely. On October 5th, attention will turn to Initial Jobless Claims and the Balance of Trade, followed by the Unemployment Rate, Non-Farm Payrolls, and Baker Hughes Total Rig Count on October 6th.
Market Trends: Devarsh Vakil, Deputy Head of Retail Research at HDFC Securities, noted that Indian markets opened the October series on a strong note, sustaining gains throughout the trading session. Smaller stocks represented by the Nifty Mid and Small Cap 100 Index outperformed the Nifty, gaining 1.08% and 0.99%, respectively, compared to a 0.59% rise in the Nifty. However, the Nifty concluded the week with a slight dip of 0.18%, closing at 19,638.
Vakil also pointed out that Asian equities experienced gains, particularly in Hong Kong, on hopes that China’s Golden Week holiday would boost consumption and sentiment, counteracting concerns related to the country’s property sector crisis. Most sectoral indices ended positively, except for Nifty IT, which faced challenges due to IT services giant Accenture reporting Q4 revenue within its target range but falling short of estimates. Accenture’s cautious outlook for first-quarter revenue, below Wall Street targets, indicated potential challenges related to high inflation and interest rates impacting demand throughout the coming year.
Technical Outlook: Vakil highlighted that Nifty has found consistent support near its 50-day EMA over the last three sessions. A break above 19,767 would confirm a bullish trend reversal, while a dip below 19,492 would signal a resumption of the downtrend.
Bank Nifty: Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, observed a resurgence in bullish momentum in the Bank Nifty, with bulls successfully defending the key support level at 44,200. However, challenges remain as the 20-day moving average (20DMA) at 45,000 continues to act as a robust resistance.
The index appears to be consolidating within a defined range, with 44,200 serving as support and 45,000 as resistance. A decisive breakout on either side of this range could trigger fresh trending moves, with particular attention on the crucial support at 44,200, which could determine the index’s near-term direction.