The equity markets had a spectacular week, with the biggest weekly gain in over a year and a half. The market reached the much-awaited psychological 21,000 mark, driven by favourable state election results, better-than-expected economic growth, and hopes of an end to the rate hike cycle. This week is expected to be range-bound, with the focus on the Fed meet outcome and monthly inflation data by US & India. The benchmark indices and Bank Nifty ended at a fresh record closing high, driven by banking & financial services, energy, infrastructure, technology, metal, oil & gas, and auto stocks. The Nifty Midcap 100 and Smallcap 100 indices also witnessed gains, indicating a promising trend for investors.
Markets will react to the US non-farm payroll and unemployment rate data on Monday. The upcoming week is data-centric with crucial releases, including inflation data from India and the US. The awaited Fed policy meeting outcome will shape market sentiments, according to Vinod Nair, head of research at Geojit Financial Services. Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, expects the equity market to be range-bound due to central bank policy decisions next week.
Here are 10 key factors to watch in the coming week:
US FOMC Meet: The outcome of the two-day FOMC meeting and the commentary by Fed Chair Jerome Powell on December 13 are the most important factors to watch in the upcoming week. Though inflation is consistently falling, still above Fed’s 2 percent target, experts predict the fed funds rate will remain unchanged at 5.25-5.5 percent. Some experts forecast that rate cuts may begin in the first or second quarter of 2024.
US Inflation: It seems like the market participants are closely monitoring the US inflation numbers which are set to release a day before FOMC meet outcome on December 12. According to experts, inflation and core inflation numbers are expected to remain stable in November at 3.2 percent and 4 percent respectively.
Global Economic Data : Next week, market participants will keep an eye on the US inflation numbers ahead of the FOMC meeting outcome. Additionally, the European Central Bank and the Bank of England will announce their interest rate decisions on December 14, while manufacturing and services PMI flash data for December will be released globally.
CPI Inflation : In India, the CPI inflation for November is expected to increase to around 5.5-6 percent, due to higher food inflation, while core inflation is expected to remain steady around 4.3 percent.
FII Flow: Foreign institutional investors have bought Rs 10,900 crore worth of shares in the current month, in addition to over Rs 7,000 crore in the previous month, driving a significant rise in the Indian stock market. The trend is expected to continue given the positive economic outlook, BJP’s recent wins in three key state elections, falling oil prices, and the decline in US 10-year treasury yields. Domestic institutional investors have also contributed to this growth with purchases of over Rs 5,700 crore.
Oil Prices: Falling oil prices have been a major support for the Indian stock market as they ease fiscal concerns and lower input costs for companies. Brent crude futures corrected 3.85% during the week to settle at $75.84 a barrel after breaking the 200-week EMA in the previous week. With a 21.5% drop from $96.55 a barrel on September 25, market participants are keeping a close eye on the trend.
IPO : The primary market is set to regain momentum with Doms Industries and India Shelter Finance Corporation launching their Rs 1,200-crore IPOs during December 13-15. Presstonic Engineering and S J Logistics IPOs will be open for subscription during December 11-14 while Shree OSFM E-Mobility and Siyaram Recycling Industries public issues will be launched during December 14-18. Accent Microcell’s public issue ends on December 12, while Sheetal Universal debuts on December 11 and Graphisads on December 13.
