Dalal Street
Retail inflation, IPO action are among the top 10 factors dictating Dalal Street’s mood this week.
In a recent website post, the Indian stock market experienced its most robust week in the past two months, with the Nifty 50 and the Sensex registering gains of 1.98 percent and 2.64 percent, respectively, at the close of trading on September 8.
The Nifty 50 managed to surpass the critical 19,800 level, closing at 19,819.95, while the Sensex concluded at 66,598.91. Looking forward, as the inflation figures for August are anticipated to be revealed, it’s essential to monitor whether the market’s upward momentum can be sustained.
During the previous week, sectors such as metals, real estate, and media outperformed, driving gains in sectoral indices. Furthermore, broader markets continued their upward trajectory, with the Nifty Midcap 100 index outperforming the Nifty. The advance-decline ratio remained strong at 1.15:1, and both the Nifty Midcap and Smallcap indices have now recorded substantial gains for the third consecutive week.
Next week’s top 10 factors
Retail inflation
India’s headline retail inflation is expected to have declined in August but stayed well above the 6-percent upper band of the Reserve Bank of India’s (RBI) 2-6 percent tolerance range. According to a Moneycontrol survey of 21 economists, the Consumer Price Index (CPI) inflation likely fell to 7.0 percent in August from the 15-month high of 7.44 percent in July. In the last monetary policy meeting, the RBI raised its CPI inflation forecast for the July-September period by 100 basis points to 6.2 percent and by 30 basis points to 5.4 percent for 2023–24 as a whole, even as it left the repo rate unchanged at 6.5 percent for the third meeting in a row. The Ministry of Statistics and Program Implementation will release the retail inflation data for August at 5.30 p.m. on September 12. This will give further insight into the RBI’s repo rate trajectory.
US Inflation:
The eagerly anticipated US Consumer Price Index (CPI) data, set to be unveiled on September 13, is poised to be a focal point for market observers. Analysts are bracing for a potential increase in August, with expectations of a rise to 3.6 percent. This anticipated uptick comes after the CPI inched up by 3.2 percent year-on-year in July, marking the first increase in over a year. Moreover, market experts anticipate that the core CPI, which excludes volatile food and energy components, will exhibit a slight decrease from its previous level of 4.7 percent. This core CPI reading is projected to come in at 0.2 percent month-on-month and is anticipated to fall to 4.3 percent on an annual basis.
Domestic Economic Data:
Another critical date on the economic calendar is September 12, when investors will eagerly await the release of India’s industrial production data (IIP). Anticipations are running high, with expectations of a notable 5 percent increase. This follows a previous dip in industrial growth, which had fallen to a three-month low of 3.7 percent back in June. Furthermore, economic enthusiasts can look forward to additional data releases by the government, including wholesale price inflation figures and trade balance data, as well as import and export numbers on subsequent days, all contributing to the broader economic outlook.
Oil Prices:
Throughout the week, oil markets have witnessed an approximately 2 percent gain in both Brent and West Texas Intermediate (WTI) oil prices, culminating in Brent futures settling at $90.65 per barrel and US WTI crude closing at $87.51 per barrel. This price surge has been attributed to significant factors, notably the decision by the OPEC+ alliance to extend voluntary production cuts of 1.3 million barrels per day until December 2023. Market analysts suggest that this move has the potential to tip global markets into a 1.5 million barrels per day deficit by the end of Q4 2023. The trajectory of oil prices in the upcoming period will be shaped by the dynamic interplay between China’s gradual demand recovery and the ongoing production cuts.
FII Flow:
Despite robust gains in the domestic equity markets in the previous week, foreign institutional investors have opted to offload Indian equities to the tune of Rs 9,300 crore. This selling spree has been primarily attributed to the resurgence of the US dollar index and the corresponding surge in US Treasury yields. Additionally, sharp currency depreciation in China and Japan against the US dollar has exerted pressure on the local currency, resulting in foreign fund outflows. The future movement of foreign fund inflows remains uncertain and is subject to fluctuation depending on developments in US Treasury yields and global currency trends, which could potentially prompt overseas investors to exit emerging markets, including India.
Technical Levels:
From a technical point, market analysts have observed a notable breakout in the Nifty, characterized by a bullish flag formation. This pattern suggests the potential for a significant upward movement. However, investors and traders should remain watchful as the Nifty faces a pivotal psychological hurdle at the coveted 20,000 mark. If the Nifty encounters resistance at this level, there is a possibility of it forming a double top pattern, potentially triggering profit-taking. Conversely, the range between 19,600 and 19,500 is considered a robust demand zone, offering crucial support.
F&O Cues:
In the options market, data signals the possibility of the Nifty hitting the next critical resistance level at 20,000 in the forthcoming trading sessions. This level has not only attracted the maximum open interest but also substantial Call writing, reinforcing its significance. On the flip side, support levels are identified at 19,700–19,600.
Primary Market Action:
The primary market continues to be active, with forthcoming mainboard listings featuring Ratnaveer Precision Engineering and Rishabh Instruments scheduled for September 11. Additionally, several IPOs on the SME board are poised to close for subscription or open for subscription, contributing to the diversity and dynamism of the primary market landscape.
Global Economic Data Points:
Keeping an eye on global economic events, the European Central Bank is poised to maintain interest rates at their current levels on September 14, as suggested by a majority of economists polled by Reuters. However, a significant proportion of experts anticipate one more rate increase later in the year as part of efforts to combat inflation, adding an additional layer of complexity to the global economic landscape.
IPO WATCH
In the upcoming week, six Initial Public Offers (IPOs) are scheduled to be launched on the main board and small and medium enterprises (SME) exchanges. The mainboard segment will witness the IPO of RR Kabel on September 13, while the mainsegment will see the opening of the mainsegment for subscription on the following dates: September 14. In the small and medium enterprises segment, the following IPOs will be launched on the relevant exchanges: September 12 for the mainsegment and September 15 for the smallersegment. Additionally, the following listings are scheduled to take place: September 11 for the BSE and September 13 for the NSE Small and Medium Enterprises (SME).
CORPORATE ACTION
Ex-Dividend in Corporate Action: Several Companies Will Trade Ex-Dividend This Week, Starting From Monday, Sept. 11
The following companies will trade ex dividend this week:
IRFC (Indian Railway Finance Corporation)
Jindal Stainless (Jindal Stainless)
Apollo Pipes (Apollo Pipes)
Multichoice Exchange of India (MCX)
for Details
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