Nonetheless, even though technicals largely suggest that bears will take control of the market this week, here are the key factors that will influence the domestic stock market’s trajectory going ahead.
The crucial US Federal Reserve meeting is slated for September 21. According to reports, there is a high chance that the Fed shall yet again hike rates by a steep 75 bps as has been done in the past two monetary decisions. Further as per a Bloomberg report, the Fed forecast released at the meeting is expected to show the upper band of the range to 4 per cent by year-end and edging higher next year, before cuts in 2024 take it back to 3.6 per cent.
The action shall be widely a reflection of a tougher fight against inflation after August core consumer-price growth came in hotter than expected, added the report.
FII flow: So far in the September month, FIIs have remained net buyers in Indian equities. According to NSDL data, FPI buying through exchanges upto September 16th stood at Rs 12,084 crore. Nonetheless, on Friday, FIIs sold equities worth Rs 3260 crore and this sudden large selling is also seen as one of the reasons for the sharp fall in the indices. “The market will have its keen eye on this trend as any reversal could result in a temporary hiccup”, noted Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. Global macros: Besides the US Fed meeting, the US initial jobless claims data will be another factor to track on September 22. Also, two other major central banks, Bank of Japan and Bank of England will be meeting for their monetary policy on the same day.
Global bond yields and dollar movement: “Despite its strong decoupling scenario and encouraging macroeconomic data, domestic bourses succumbed to the global trend of rising bond yields and the dollar index as a result of rate hike fears in the global market”, said Vinod Nair, Head of Research at . Notably, amid red hot inflation, there is seen more damage as treasury yields are likely to be pushed higher.
Interestingly, as treasury yields trend higher in the global markets, FIIs tend to offload their positions across risky asset classes from emerging markets including India.
Also, the US dollar index is maintained on the higher side at 109.64 and any strength in the dollar is negative for Indian equities. Crude price: Crude oil price has remained on the lower side for quite some time. Last, WTI crude quoted at $85.11 per barrel. Leading brokerage
maintained, “Crude oil prices and Nifty returns have a curvilinear correlation if data over the past two decades is any indication. This implies that below the $90-100 per barrel range, the crude oil prices and Nifty performance are positively correlated but the correlation turns negative as prices rise above the said range”.
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