“Q1 GDP growth has moderated, and similar trends are witnessed in corporate earnings. Also, August Indian PMI readings were marginally below July numbers, indicating that caution is in the air. Weak monthly sales impacted the Auto sector. PSU banks underperformed due to premium valuation, while a decline in commodity prices led to a drop in the metals sector,” said Vinod Nair, Head of Research, Geojit Financial Services.
On the weekly chart, Nifty has formed a bearish engulfing candle to indicate a more cautious outlook ahead.
Here are key factors to track this week:
1) Fed rate cut hopes
On Monday, the market will initially react to weaker-than-expected US job data, which has reignited discussions about the size of the US Federal Reserve’s anticipated interest rate cut.While markets have largely priced in a 25-basis point rate cut, any adjustment beyond that could provide a positive surprise in the short term, said Ajit Mishra of Religare Broking.2) IPO
The market will see at least 4 mainboard IPOs and 9 SME IPOs opening during the week, making it a busy week in the primary market.
Bajaj Housing Finance’s Rs 6,560 crore IPO will be the main attraction. Other mainboard IPOs are those of PN Gadgil Jewellers, Tolins Tyres and Kross.
3) Crude oil rates
Brent crude oil prices ended the week 10% lower amid concerns around Chinese demand. Signals that Libya’s rival factions could be closer to an agreement to end the dispute that has halted the country’s crude exports also pressured oil prices this week.
4) FII
In the first week of September, foreign investors have invested around Rs 11,000 crore in equity through the exchanges and primary market route.
“Concerns over a potential US recession and China’s ongoing economic challenges are critical considerations for investors re-evaluating their allocations. If the risk-off strategy continues to gain traction, emerging markets may experience a slowdown in FPI inflows,” Sunil Damania, Chief Investment Officer, MojoPMS.
5) Global macros
The market would be closely tracking crucial data, including the US inflation report on September 11 and the Producer Price Index (PPI) on September 14 ahead of the US Fed’s meeting next week.
6) Inflation data
On the domestic front, investors will keep an eye on key economic indicators, with the release of India’s Index of Industrial Production (IIP) and Consumer Price Index (CPI) on September 12. These data points will provide important cues for the market’s trajectory, especially amid concerns about global economic headwinds, analysts say.
7) Technical
The zone of 24,500-24,400 will act as crucial support for the index as it is the confluence of the 50-day EMA and 61.8 percent Fibonacci retracement level of its prior upward rally (23,894-25,334).
If the index slips below the level of 24,400, then the next support is placed in the zone of 24,100-24,050 level. While on the upside, the resistance shifted lower in the zone of 25,050-25,100 level, SBI Securities said.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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