US Fed meet, macroeconomic data to dictate the course of action on markets

Markets may see a roller-coaster ride next week as investors eye the US Fed meet and key macroecomic numbers

Markets snapped four weeks of losses after stability in the Chinese markets defused concerns about a global economic slowdown. The recent prime minister’s meeting with industry leaders grew investors’ confidence and supported market sentiments for the week. In addition, after the recent sell-off, market participants bought battered stocks that have good potential.

For the week-ended September 11, the Sensex jumped 408 points or 1.62 per cent to close at 25,610 while, the Nifty soared 134 points or 1.75 per cent to end at 7,790. However, the broader markets underperformed the benchmarks. The BSE Mid-cap Index surged 161 points or 1.54 per cent to close at 10,520 and the BSE Small-cap Index rose 93 points or 0.88 per cent to finish at 10,670.

“After a difficult start to September, we have seen some resemblance of a minor recovery in the markets across the globe. However, it’s the next week that would hold the key to market trend and liquidity flows due to the US Fed meet. Markets are expecting a start of a road map towards hiking the interest rates by the Fed,” said Kunal Bothra, head-Advisory, LKP Securities.

“For India, the IIP data, stable inflation and fiscal deficit numbers are now good factors considered by the market, which RBI can consider for a further interest rate cut. For the next week, a closing above 7,850 spot would indicate a completion of an inverse head and shoulder pattern on the Nifty (spot). However, it’s advisable to be cautious, as volatility could be on the rise once again,” he added.

On the global front, China revised its annual economic growth rate in 2014 to 7.3 per cent from the previously released figure of 7.4 per cent. Furthermore, China witnessed a drop in the imports fuelling concerns regarding its contribution to global growth.

Prime Minister Modi met with industrialists and business leaders to discuss global economic turbulence and possible strategies to revive India’s growth amid global woes.

The Central Cabinet approved gold bond and gold monetisation schemes to reduce the yellow metal’s demand in physical form and stake out idle gold lying with households and other entities. Reacting to the development, Gitanjali Gems and Shree Ganesh Jewellery surged 2-15 per cent.

Metal companies rallied across the board, as commodity prices shot up following stability in the world’s second largest economy, China.  Hindalco, Tata Steel, JSW Steel, Vedanta and NMDC soared 4-10 per cent.

Future outlook

The Federal Open Market Committee’s two-day policy meeting on September 16-17 will be keenly watched and will dictate the trend on the bourses in the coming week.

Indian markets will remain closed on Thursday on account of Ganesh Chaturthi.

Market will react to the industrial production data for July released after market hours on Friday. Industrial production rose at an accelerated pace of 3.8 per cent in June 2015 compared with the revised growth of 2.5 per cent  in May 2015. The government will unveil the Consumer Price Index data and the Wholesale Price Index data for August on Monday.

FII stance, global trends, movement of rupee and crude oil and progress of monsoons are likely to dictate the trend on the indices.