InvestorQ : What are the major trading investment cues for the week beginning on September 30th 2019 and how to prepare for trade?
Arya Nanda made post

What are the major trading investment cues for the week beginning on September 30th 2019 and how to prepare for trade?

Deepa Salunkhe answered.
3 years ago

The expiry week of September was a critical week in that it was one of the best expiries after a long time. It also marked a week when buying was quite frenetic across banks and autos and the foreign investors were also aggressive buyers in equities. Let us look at some important trading and investment cues for the coming week.

a) Among the various global developments there are hopes of a revival in the trade talks in a big way. However, this is likely to happen only if the Trump impeachment process is put to rest. This week is likely to be hectic as the assault under Nancy Pelosi on Donald Trump is likely to start off. It could sentimentally impact the global markets and Indian markets also saw the impact on Friday.

b) The markets will be a little wary ahead of the monetary policy committee (MPC) meeting which will conclude on October 04th Friday. The broad expectation is of a 25 bps rate cut and that is already priced into the markets as of now. Anything above that would be positive for the markets.

c) The overall enthusiasm in the markets surrounding the tax cuts and the special tax incentive for new manufacturing outfits will continue in the coming days. That will keep the markets enthused for the time being.

d) The big focus will be the monthly auto numbers during the week for the month of September. In August, the passenger car sales fell by 41% on a YOY basis. The auto stocks were up nearly 10% in the aftermath of the tax cuts and actually managed to outperform the index overall. Unless there is traction in these numbers, the actual performance of auto stocks could falter in the coming week.

e) The tensions between the US and China are rising and Trump could use the nationalist rhetoric to galvanize the public opinion in his favour ahead of the impeachment. For example, Trump has threatened to delist all Chinese companies from the US and has also threatened to limit US investments in China. These kinds of announcements have the potential to spook the markets globally.

f) The US markets will hold the key to Indian market performance. Last week, two sets of data that came out in the US viz. the consumer spending and the capital investment data were quite weak. That is likely to be an overhang on the US markets. Also considering that the dollar index is close to a 2-year high, the pressure on the Indian markets could continue.

g) Crude prices have fallen sharply in the last week after Saudi Aramco managed to restore full supply nearly 5-days ahead of schedule. This has resulted in crude prices retracing their pre-drone attack levels, which is a positive for the Indian markets.

h) Finally, there will be some important macro data that will be coming out during the week. The current account balance for the June quarter will be released on Sep 30th. Additionally, the fiscal deficit cumulated up to August 31st will also be released on the same day. Apart from the PMI manufacturing and the PMI services, the core sector data will be released on the 01st of October. These data points will be inputs for the monetary policy announcement.