InvestorQ : What is your outlook for markets for the first week of October? Do you see markets rebounding during the week starting 03-Oct and what are the cues to watch?
Arti Chavan made post

What is your outlook for markets for the first week of October? Do you see markets rebounding during the week starting 03-Oct and what are the cues to watch?

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diksha shah answered.
2 months ago
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Here are some of the major weekly cues that you should watch out for in the coming week.

· For the previous week, the Nifty closed -1.16% lower while the mid-cap index and the small cap indices closed lower by -1.32% and -2.32% respectively for the week. The fall in the Nifty was triggered by the more than hawkish tone of the US Fed as FPIs continued to sell. Friday did offer some relief, but that may not really sustain.

· It remains to be seen if the markets can sustain its positive overreaction to the RBI policy announcement. Remember, RBI hiked rates by 50 bps and maintained a hawkish tone, so the news may not be all that exciting. The RBI hike did step the fall in the rupee against the dollar, but FPI selling and dollar strength will add to INR pressure this week.

· In the coming week, one can expect positive reaction to auto numbers as wholesale numbers flattered for September. However, with FPIs ending the month of September with net selling of Rs7,624 crore or $903 million; markets are still likely to be cautious. Remember that FPIs have sold $2.3 billion of equities in last 8 trading sessions.

· Among key macro data points, the PMI for manufacturing and services as well as forex reserves position will be under scrutiny this week. Interestingly, consistently high PMI at around 56 levels and robust GST collections of Rs1.47 trillion have not translated into high frequency growth data. Forex chest fell further to $537 billion this week.

· The only IPO action during the week is the IPO of Electronics Mart India with the Rs500 crore fresh issue opening on 03rd October and closing on 07th October. However, real action has been on SME IPOs rather than main board IPOs, with over 87 SME IPOs this year and 4 SME IPOs closing in the current week itself.

· Two major areas of focus will be oil and global geopolitics. Russia, as part of the OPEC Plus, wants the cartel to cut production and they may accede to 1 million bpd. So oil prices could rebound. Focus will also be on Russian threats to annex parts of Ukraine, even as China also faces disconcerting news flows. Geopolitics remains fluid.

· This week, the ranges in F&O and the VIX assume importance as the markets are delicately poised around Nifty 17,000. Put call accumulation data hints at Nifty range of 16,500 to 17,600; fairly wide for the week. However, with 17,000 levels broken last week, the key variable to watch will be if VIX can taper decisively lower.

· In global data points, US focus will be on PMI, construction spend, factory orders, vehicle sales, API stocks, jobless claims, non-farm payrolls, inventories. The focus for rest of the world will be on EU PMI, PPM, Retail Sales, ECB meet; Japan BOJ view, PMI, Household Spending; China PBOC action points.

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