InvestorQ : What in your opinion are likely to be the major cues or triggers for the week in the coming shortened trading week?
swati Bakhda made post

What in your opinion are likely to be the major cues or triggers for the week in the coming shortened trading week?

diksha shah answered.
2 months ago

Here are some of the major trading cues likely for the coming week starting on 16th August…

· The previous week, the Nifty closed with 2% gains while the mid cap and small cap closed with 1.8% and 1.1% gains. Auto banks and energy stocks led the large cap story while FMCG, pharma and select IT stocks lagged. In the coming week, Nifty is likely to still drive the market. The underlying sentiments are likely to be positive.

· Some of the stocks like Star Health and Metro Brands in the mid cap space are likely to react to the demise of Rakesh Jhunjhunwala, although the impact is likely to be very temporary. Most of his larger stock holdings like Titan or Tata Motors are unlikely to be impacted in any significant way.

· This week, markets are likely to react to the fall in CPI inflation to 6.71% and the 100 bps sharp fall in food inflation. This is likely to make the RBI less hawkish. However, the trade deficit at $30 billion could keep the markets slightly wary. With results season ending, this week will see reaction in late results announcements like ONGC, LIC and Hero Moto.

· The big even this will be the minutes of the FOMC, which will be announced on Wednesday. With US inflation down at 8.5%, the undertone of the Fed language assumes importance for the future trajectory of rates in the US. However, being a truncated trading week in India, expect some caution among trader positions.

· Tuesday will see the announcement of WPI inflation for July 2022 and markets will be keen to see the WPI below 15% mark. That would give confidence to RBI to go slow on rate hikes. Also, oil has stayed below $100/bbl while the rupee has hovered around 79.50/$. The oil prices may actually hold the key to the rupee value this week.

· Even as FPIs were net buyers in July, they have been aggressive buyers in August infusing nearly $2 billion into equities. This is on hopes of less hawkishness. This has led to the Nifty taking supporting and for the coming week, the range indicated by the put/call accumulation data is 17,300 to 17,800 for Nifty. Fall in VIX to 17.5 levels should help.

· In terms of global data points to track, important US data points include FOMC minutes, housing starts, building permit, API crude stocks, jobless claims, existing home sales. Other global data points include EU Trade Balance, GDP, Inflation; Japan GDP, inflation, machinery orders; China IIP, jobless rates.