Bull vs bear: Following the rout in the US markets, Indian stock market fell sharply on Friday. As per the stock market experts, extremely fragile due to the entrenched inflation and the possibility of harsh measures by the central banks to tame the same, further other factors like geopolitical tensions, stagflation risk, and global economic growth slowdown have spooked Indian Investors and this led to a sharp fall in Sensex and Nifty.
Speaking on the reasons for slide in Indian equity market, Sunil Nyati, MD at Swastika Investmart Ltd. said, “The sudden Repo Rate and CRR hike by the RBI has perplexed investors and this marks the end of pandemic led stimulus, we believe that investors would have to work very hard to earn good returns as the days of easy money are ending. We suggest investors stay with quality names and invest in stocks that have a good growth outlook and are valued reasonably and take advantage of the current correction.”
So, it becomes important for the market traders and investors to remain vigilant about the factors that may work as major triggers for the Dalal Street. Here we list out top 5 factors that will dictate stock market next week:
1] Q4 earnings: “We are right in the middle of the earnings season. Many companies, including Asian Paint, MRF, PVR, etc., will post earnings next week, which will decide the fates of many sectors,” said Sonam Srivastava, Founder at Wright Research.
2] Inflation & Bond Yields: The RBI has signaled further rise in inflation. Commodity prices are already highly volatile and food prices are rising as well. The bond yields are also rising, signaling trouble for high leveraged businesses with low cash. The direction that Indian inflation and consumer sentiment would take could be a key factor for market next week.
3] Global Cues: Due to rise in Dollar Index to record 20-year high and demand for dollar to continue in near term, FIIs are expected to remain ‘net sellers.’ So, keeping an eye on the dollar movement would be important. Global sentiment, inflation rates, and bond yields will be essential drivers for the market in the next week. The FED rate hike has sliced the markets lower, and further narrative on how the European and US economies and markets respond will be critical for the sentiment in India and FII flows.
4] FIIs’ trade pattern: “Demand for US dollar is expected to continue and Dollar Index may go up to 105 to 107 levels in near term. If this happens, then FIIs’ may continue to remain on the ‘net sellers’ side putting more pressure on the Indian equity market,” said Anuj Gupta, Vice President — Research at IIFL Securities.
5] Commodity prices: Many market observers expect commodity prices, especially crude oil price, to ease soon after the crazy volatility in the last month in light of the Ukraine crisis. The direction of the commodity prices will decide the future of many sectors in the metals, energy, and consumer sectors.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.