Global trends, macroeconomic data, and the outcome of the US Fed policy meeting are the major factors that will drive the movement in the domestic equity markets this week, analysts said. "In the upcoming data-centric week, the focus will be on crucial releases, including inflation data from India and the US. "Indian inflation is expected to rise, while US inflation will remain steady.
The US Fed also said that the unemployment rate too would rise to 5.7 per cent.
RBI will now increasingly shift focus to domestic parameters
Indian markets on Thursday shrugged off any negative impact.
The recent weakness of the rupee has been due to yuan's devaluation.
'With China falling out of favour, India is where investors see the demographic and digital dividend apart from the benefits of reforms playing out.' 'Your prime minister has also done a great job of sharing this story with the world.'
Nearly 40 per cent of IITians sitting for placements in 2024 are yet to receive job offers, showing a doubling of the 'unplaced' in the last three years from 19 per cent in 2021-2022 to 38 per cent in 2023-2024.
Among the Sensex firms, IndusInd Bank, Tata Steel, Tata Motors, Sun Pharma, Infosys, Mahindra & Mahindra, Infosys, NTPC, Bharti Airtel, HCL Technologies and Axis Bank were the biggest gainers. Tech Mahindra and Bajaj Finance were the laggards.
'We expect the bull-market phase to still persist, but now led by large-caps which offer better valuation and benefit from FII inflows.'
'We expect continued pressure on midcaps, but any sharp correction looks unlikely from here on.'
Production from many gold producing regions of the world is currently constrained by power shortages; and rapidly inflating development costs are causing the postponement of several otherwise promising development projects around the world.
Foreign portfolio investors' (FPIs') net investments in the domestic debt market surged in December, marking a 77-month high, that is, since July 2017. According to market participants, this significant uptick in FPI inflows can be attributed to the post-domestic policy outcome and the US Federal Reserve's dovish stance at the December policy. FPI inflows into debt stood at Rs 18,393 crore in December against Rs 14,106 crore in November, according to data on the National Securities Depository Limited.
Govt sees little Fed hike impact on 'fortressed' Indian markets.
Janet Yellen is guiding the Federal Reserve towards its first rate rise in a decade armed with traditional economic models that some economists worry could fail her in a world of massive money printing and near zero rates.
Analysts remain bullish on the road ahead for the equity markets, but warn against volatility on account of domestic and global cues. The upcoming Lok Sabha elections back home and the interest rate trajectory of the US Federal Reserve, they said, will be the two most important factors that the markets will keep a tab on. That apart, the valuation of the Indian markets, they feel, will also be eyed in context of how global peers are performing.
Hawkish guidance by the US Fed raises concerns it could tie the hands of RBI from trimming rates.
Fed policymakers' deepening uncertainty about their own projections has resulted in the central bank sending mixed messages
The trend was visible in the early trade on Thursday as investors indulged in trimming their bets after the minutes of the US Federal Reserve's September meeting indicated a possible rate hike this year.
'When the chief minister saw how Manoj Jarange Patil had successfully held the state government hostage to his whims, Eknath Shinde knew he had a very clear chance of enamouring himself to these Maratha agitators by accepting Patil's demands.'
The US Federal Reserve's interest rate decision, global cues, macroeconomic data announcements and the ongoing quarterly earnings are the major triggers that will dictate trends in stock markets this week, analysts said. Besides, the trading activity of foreign investors and the movement of global oil benchmark Brent crude will also be tracked. "All eyes are on the outcome of the US Federal Reserve meeting scheduled for November 1, particularly due to the multi-year high levels of the US bond yields.
Jewellery stores remained deserted as buyers deferred their non-essential purchases awaiting softness in gold prices.
Asian emerging market stock prices did see a bounce post Fed-talk.
Years of unprecedented stimulus has left the Fed swollen with $4.5 trillion in bonds
Indian government bonds, particularly those of shorter maturity, strengthened sharply on Monday, as the collapse of the California-based Silicon Valley Bank (SVB) prompted investors to rush to the safety of American debt, leading to a decline in US bond yields.
In signs that the country's growth is on track, the economic activity across the country improved in recent months, according to the US Federal Reserve.
The Reserve Bank of India has already reduced the policy rate by a total of 75 basis points, or 0.75 per cent, since January.
The Fed has said it wants to be "reasonably confident" in the inflation outlook before a rate hike.
Getting out of the zero-rate armchair was overdue, and many in the market will be glad it has finally happened
Investors' wealth fell by Rs 2.89 lakh crore in two days of market fall, with the BSE Sensex tumbling 796 points on Wednesday, amid weak global market trends ahead of the US Federal Reserve's interest rate decision. Fresh foreign fund outflows and caution ahead of a host of interest rate decisions from global central banks also added to the overall bearish trend. Besides, the US Fed meeting, the BoE (Bank of England) and the BoJ (Bank of Japan) are also scheduled to meet this week.
Equity benchmark Sensex surged past the 57,000-mark by rallying over 1,000 points on Thursday, tracking an overall bullish trend in global equities despite the US Federal Reserve hiking rates. The 30-share BSE index closed 1,047.28 points or 1.84 per cent higher at 57,863.93. Likewise, the NSE Nifty surged 311.70 points or 1.84 per cent to end at 17,287.05.
Many things are going unnoticed by India watchers.
Improvements in the labour market has triggered this sentiment.
Global trends and trading activity of foreign investors would largely dictate terms in the equity markets this week amid a lack of major domestic triggers, analysts said. Markets may face near-term consolidation due to elevated valuations, they noted. "While the previous week was predominantly shaped by developments in the US Federal Reserve policy, attention will now shift to the Bank of Japan's policy decision on December 19," Santosh Meena, Head of Research, Swastika Investmart Ltd, said.
India is more insulated to Fed-related volatility than other emerging markets due to its better economic fundamentals
Among the Sensex firms, Infosys, Tech Mahindra, HCL Technologies, Tata Consultancy Services, Wipro and JSW Steel were the major gainers during the morning deals. Nestle, Bharti Airtel, Axis Bank ITC were among the laggards.
India's prices are rising faster than many of its emerging market peers. The country's inflation print for May at 4.25 per cent is a marked reduction from the levels seen in May 2022 (7.04 per cent). However, even though the inflation rate remains within the Reserve Bank of India's medium-term target of 4 per cent, with a 2 per cent margin on either side, it continues to be higher than China, Russia, and Brazil.
Markets now expect the Fed to normalise rates gradually.
Market breadth is positive with 942 advances and 196 declines.
Market participants attribute the stability to the Reserve Bank of India's timely intervention in the foreign exchange market, both in terms of selling and buying dollars.
Eleven companies have launched their initial public offerings (IPOs) in December 2023, making this month the second-best December for public offerings since 1996. Collectively, they are raising Rs 8,182.7 crore this month. In December 2021, 11 companies raised Rs 9,534 crore. However, excluding December 2021, this month marks the best December for IPOs since 1996.
Rajan has ignored pressure to loosen policy.
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