New Delhi: Indian stock markets rose nearly 1% this week, marking a second consecutive week of gains, but the gains came amid mixed cues. The Sensex and Nifty indexes were supported by easing global geopolitical tensions, positive results of state elections, and MSCI rebalancing. However, selling by foreign institutional investors (FIIs) limited the upside in the market.
Prashant Tapase, Head of Research, Mehta Equity, said that the Indian market is now witnessing sharp volatility, as there is a rapid change in the positive and negative territory. The main reason for this is valuation concerns and continuous selling by foreign investors. Despite the recent recovery, no clear trend is visible, as there is a lack of fresh positive signals. Analysts believe that the market may remain in sideways movement in the next 6-12 months so that earnings can match with valuation.
Here are 8 major factors affecting the market in the coming week:
Q2 GDP data
The market will first react to India's Q2 GDP data, which came in at 5.4%, while estimates were 6.5%. Although the figure was lower than expectations, this slower growth has already been factored into the market. Some analysts believe this weak data could prompt the Reserve Bank of India (RBI) to consider cutting rates.
auto sales figures
Auto stocks will be in focus on Monday as companies will release their monthly sales reports. This time high sales are expected during the festive and wedding seasons. If the sales figures are better than expectations, it may impact the stocks.
FII sales
Amid a weak Q2 earnings season, foreign institutional investors (FIIs) sold nearly ₹26,000 crores in November, but the pace of selling was found to be slower than in October, when FIIs had sold ₹94,000 crores. In the derivatives market, FIIs have started the December series with 67% short positions, creating the possibility of a short-covering rally. Historically, the month of December has proved to be positive for the market, which could provide a supportive backdrop.
RBI Monetary Policy Meeting
The RBI policy meeting on December 6 will be crucial as investors await clarity on the possibility of a rate cut. Notably, despite a slowdown in growth in H1FY25, inflation has risen in the last few months, raising expectations of a rate change.
Technical Outlook of Nifty
Nifty has been facing strong resistance around 24,350levelsl for the last few days, and immediate support is seen at 24,000 and 23,750-800 levels. If Nifty crossed thee s 24,350 level then further strength is expected, otherwise, consolidation is likely to continue at this level.
Global signals
On the global front, concerns remain over geopolitical tensions such as the Russia-Ukraine situation. However, the recent decline in the dollar index and US bond yields is seen as positive for emerging markets, which could also be favorable for India.
Economic Statistics
Important domestic and global economic data will influence the market direction next week. This includes India's Nikkei manufacturing and services PMI (November), various US PMIs, job data, and other important economic data.
Crude Oil Prices
Brent crude prices fell 4% last week, raising hopes of a reduction in tensions in the Middle East. The fall in oil prices may help Indian companies improve their operating profits in the next few months.
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