InvestorQ : What is your market view for the coming week and what are the major events you see impacting the stock markets during the week?
shrinidhi Rajan made post

What is your market view for the coming week and what are the major events you see impacting the stock markets during the week?

diksha shah answered.
2 weeks ago

Here is what to expect from the stock markets in the coming week starting on Monday.

· For the previous week, the Nifty closed -1.68% lower amidst Fed rate hike fears, while the Mid-cap index fell by -1.7% for the week and small cap index was down -1.2%. There was trading caution across large caps and mid-caps and that is likely to continue in the coming week also, at least till there is clarity on the Fed rate stance and its outlook.

· Markets will closely watch the forex reserves position this week, which already fell to $550 billion last week. Forex reserves have depleted by $90 billion since the start of 2022 with the RBI continuing to support the Indian rupee. The rupee level of 80/$ will assume special significance in this week amid all the macro headwinds for the week.

· The biggest even will be the Fed action after the FOMC meet concluding on 21st September. The street expects a 75 bps rate hike by the Fed, so anything lower would be a boost. For Indian markets, it will also set the tone for the RBI will do when the MPC meets up for its bi-monthly monetary policy meet towards the end of this month.

· Talking of the Indian rupee, there will be two more signals. First, the Bank of Japan is meeting this week and remains the only developed market central bank yet to get fully hawkish. Rupee will also keep an eye on the Yuan weakness, which has weakened to crisis levels of 7/$ and is down 12% in 2022. Rupee may need competitive weakening.

· In other key macro data points, the US 2-year bond yields at 3.87% is at a 15 year high. Now apart from the inverted yield syndrome, this spike also puts pressure on Indian benchmark 10-year yields. So market volatility could take the VIX well above 20 this week with Nifty range of 17,300 to 17,800 with distinct downward bias.

· In institutional action, FIIs and domestic investors sold Rs3,800 crore overall last week, which will keep the markets under pressure. However, institutional participation in IPOs has been good. The focus will turn to further IPO cancellations; with PharmEasy, MobiKwik, Macleods Pharma and Go First already put off for now.

· Key data points from US markets this week include FOMC meet, Building permits, Housing starts, API stocks, Existing home sales, jobless claims, current account. Other data points include EU Construction output, current account, non-monetary policy meeting; Japan BOJ Rate decision, Inflation.