Indian equity benchmarks broke a series of records to log a fourth straight weekly gain on Friday. Banking, IT and auto shares helped the Nifty 50 benchmark cross the 17,500 mark while the leaner, 30-scrip Sensex index took out 59,000. The market halted a record breaking spree on Friday, but analysts are hopeful of more upside ahead.
For the week ended September 17, the Sensex index rose 710.8 points or 1.2 percent to 59,015.9, and the 50-scrip benchmark climbed 215.9 points to 17,585.2 -- not far from all-time highs registered last week.
This week, analysts will keenly monitor updates from the Federal Reserve's scheduled policy meeting for clues on the timing of tapering of its massive stimulus. Movements in global markets on account of updates on the US central bank meeting are likely to dictate the trend on Dalal Street.
According to Vinod Nair, Head of Research at Geojit Financial Services, global focus will be on the policy meetings of central banks including the Federal Reserve. "With weak US job data and inflation increasing at a slower pace, Fed is not expected to hint on taper plans in the upcoming meeting," he said.
Policymakers are widely expected to take fresh developments in inflation and the intensity of the Delta variant into account before announcing tapering plans. While the Fed's planned reduction of bond purchases has been in focus for much of 2021 so far, its take on interest rates may continue to impact markets the world over, according to Samco Securities.
Banking stocks will remain in focus after the sectoral index touched back-to-back record highs after the government cleared the formation of the country's first 'bad bank'.
Profit Booking Cannot Be Ruled Out
The overall sentiment in the market remains optimistic, given improving macro data points and positive earnings expectations. The government's production-linked incentive schemes shows a strong intent to address industry challenges, and pave way for the development of local capabilities and capacities. The steps enable companies to rightly capture the opportunity thrown open by the China Plus One strategy, according to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
However, valuations are at uncomfortable levels and could lead to bouts of profit booking. "Weak global cues on account of worries over slower economic growth and rising cases of the Delta variant (of Covid) globally would leave the market oscillating between greed and fear," he said.
Here are key factors and events that are likely to influence Dalal Street in the week starting September 20:
The overall positional outlook on the market remains bullish as long as the Nifty50 index doesn’t slip below 17,500. A break below that level will put a halt to the ongoing momentum. Immediate support and resistance are now placed at 17,400 and 17,900 respectively, according to Samco research.
Foreign institutional investors (FII) net bought Indian equities worth Rs 6,902.9 crore ($938 million) in the week gone by, data showed.
United States: The biggest event of the week globally will be the policy decision by the US central bank, due on Wednesday. Fed Chair Jerome Powell's remarks will be watched closely to assess the course of tightening of its ultra-loose monetary policy and the timing of withdrawal of massive stimulus. The FOMC's economic projections will also be monitored for more clarity on the pace of recovery from the damage caused by the pandemic.
US consumer confidence flash data will also be released on Wednesday. Data on initial jobless claims and monthly home sales will be published the next day.
Japan: The Bank of Japan will announce its decision on key interest rates on Wednesday.
Europe: The European Central Bank will conduct its general council meeting on Thursday. The Bank of England will decide on key rates on the same day. PMI data on manufacturing and services will also be announced.
IPO Market Buzz
Paras Defence and Space Technologies' initial public offer will open for subscription on September 21, and close on September 23.
Shares of Sansera Engineering -- whose IPO was subscribed 11.5 times last week -- are likely to hit the secondary market on Friday, September 24.
First Published: IST