Dalal Street is closed on October 2 (Monday) for Gandhi Jayanti, but investors still have a lot of data and events to look forward to in this week.
The domestic market was volatile all week due to rising crude oil prices, inflationary pressures, and Fed rate hike fears. Vinod Nair, Head of Research at Geojit Financial Services, said rising US bond yields and INR volatility made domestic indexes less appealing to overseas investors.Â
Nair expects volatility to remain high in the short term due to the upside risk of domestic inflation due to higher crude prices and advises investors to watch domestic, US, and Chinese PMI data and other indicators that will shape future market trends.
Next week’s top 10 factors
RBI policyÂ
According to experts, the Reserve Bank is expected to hold policy rates unchanged for the fourth time in a row as retail inflation is strong and the US Federal Reserve has opted to maintain its hawkish posture for some time longer.
The Reserve Bank lifted the benchmark repo rate to 6.5 percent on February 8, 2023, and has kept rates at that level ever since. The Reserve Bank Governor will preside over a six-member Monetary Policy Committee (MPC) meeting on October 4-6, 2023.
Manufacturing and services numbersÂ
The manufacturing PMI for September in India will be reported on October 3 and is projected to fall to 57 from 58.6 the previous month. Furthermore, the services PMI, which is slated to be announced on October 5, is predicted to fall to 59 from 60.1 in August. This would be the second consecutive month of slowing growth following a 13-year high of 62.3 in July.
The Fed SpeaksÂ
The Fed members are scheduled to participate at multiple engagements this week. On October 2, Fed Chair Jerome Powell and Patrick Harker will participate in a roundtable discussion with Pennsylvania business owners. Williams and Mester of the Fed will both speak at different gatherings on Monday.
Bowman is scheduled to speak at a banking conference on Wednesday. Mester will speak at the Chicago Payments event on Thursday, while Daly will speak at the Economic Club in New York.
This follows the Federal Reserve’s favored inflation indicator, the Personal Consumption Expenditures (PCE) index, which grew at its slowest monthly rate since late 2020 in August. Core PCE increased 0.1 percent month on month in August, down from 0.2 percent in July and the lowest rate since November 2020. Â
US Markets
US stocks rose on Friday after a softer-than-expected personal consumption expenditures (PCE) price index rose 0.4% month-on-month in August, compared to 0.5% predictions. Dow 30 rose 116.07 points, or 0.35%, to 33,666.30, while S&P 500 rose 25.19 points, or 0.59%, to 4,299.70. The Nasdaq Composite rose 108.43 points, or 0.83%, to 13,201.30.
Indian markets will follow the US market close on Monday when they open on Tuesday. They will also follow GIFT Nifty futures on Tuesday. This is an early sign of Nifty50 and Tuesday action.
Global Economic Data Points
This week, US will release S&P Global Manufacturing PMI, Global Composite Services PMI, US Trade, and initial unemployment claims. Data on services and composite PMIs. The UK will provide CIPS, manufacturing, Services, and Composite PMI data.
Global manufacturing PMI, unemployment, services PMI, retail sales, and PPI for the Eurozone.
China markets are closed October 2–6. It will provide manufacturing, non-manufacturing, and composite PMI data on October 1.
Oil Prices
Front-month Brent November futures increased by 2.2 percent in the previous week to $95.31 per barrel, and by 27 percent in the third quarter. West Texas Intermediate crude (WTI) in the United States finished the week up 1% and the quarter up 29%.
According to Ravindra Rao of Kotak Securities, the OPEC meeting on October 4 will now determine crude oil price trend. While Russia and Saudi Arabia’s production increases are welcome, Reuters reports that OPEC+ is unlikely to change its existing oil output policy.
 “With oil prices rising, investors must be cautious.” If crude remains over the 90 USD level, it will pose a threat to inflation and reduce operational margins, according to Vinod Nair, Head of Research at Geojit Financial Services.Â
FII Flow
Foreign institutional investors sold equities worth Rs 8430.77 crore last week, while local institutional investors acquired equities worth Rs 8143.28 crore.
In September, FIIs net sold Rs 26,692.16 crore worth of stocks, while DIIs net bought Rs 20,312.65 crore worth of equities. Going forward, it will be critical to observe this pattern against the backdrop of the dollar index easing.
On September 29, the dollar index fell below 106 points as data showed that the core PCE price index climbed less than expected. A weaker dollar index has typically been associated with an increase in foreign inflows into emerging markets such as India. Â
Corporation Action
India car sales data to be revealed on October 1; Siyaram Silk Mills repurchase tender offer ends; Spandana Spoorthy to consider NCD private placement fund raising; Bajaj Finance to consider fund raising.
Apex Frozen Foods, Vardhman Textiles, Elin Electronics, Kitex Garments, Shriram Properties, Gujarat Mineral Development Supreme Engineering, and Anupam Rasayan all have AGMs during the week.
Technical View
Experts say the 19,500 level on the downside and the 19,800 level on the upside are the two critical levels to watch now that the Nifty has taken support from the 50-Day Exponential Moving Average (DEMA) of 19,562. “A decisive break on either side will provide clues about the index’s future direction,” said Ashwin Ramani, Derivatives and Technical Analyst at SAMCO Securities.Â
The bulls on the Bank Nifty have successfully protected the important support level of 44,200. “However, difficulties persist as the 20-day moving average (20DMA) at 45,000 remains a strong resistance.” “The index appears to be consolidating within a range, with levels of 44,200 on the downside and 45,000 on the upside defining this range,” Kunal Shah, Senior Technical & Derivative analyst at LKP Securities, said, adding that a strong break on either side would initiate new trending moves.
F&O Cues
According to the options data, the 19,800 line on the Nifty50 is predicted to be essential for the upside, while the 19,600-19,500 mark is likely to be critical for any additional downside.
On the weekly Options front, the highest Call open interest was seen at the 19,800 strike, followed by the 19,700 and 20,200 strikes, with meaningful Call writing at the 19,800 strike, then the 20,200 and 20,100 strikes, while the highest Put open interest was seen at the 19,600 strike, followed by the 19,500 strike, with Put writing at the same strike in the same sequence.
“Strong Put writing was observed at the 19,500 and 19,600 strikes, which resulted in an increase in the Nifty on Friday.” The two critical levels to watch in Nifty are the 19,500 level on the downside and the 19,800 level on the upside. “A decisive break on either side will provide cues about the index’s future direction,” SAMCO Securities’ derivatives and technical analyst Ashwin Ramani said.
IPOÂ Â
Plaza Wires will close for subscription on October 5th, and Valiant Laboratories will close on October 3rd. JSW Infrastructure and Vaibhav Jewellers will make their market debuts on October 3, considerably ahead of their scheduled listing dates. Given the T+3 listing timeframe, Valiant Laboratories is also expected to make its debut in the following week.
On the SME front, a slew of IPOs, including Karnika Industries, Plada Infotech Services, Sharp Chucks And Machines, Vishnusurya Projects and Infra, Vivaa Tradecom, Oneclick Logistics India, Canarys Automations, Vinyas Innovative Technologies, Kontor Space, and E Factor Experiences, will close for subscription this week.
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