Macro data to steer the Indian equities movements (Market Outlook)

Domestic macro-economic data, along with quarterly earnings' results and the movement of foreign funds are expected to drive investors' sentiments in the Indian equity markets in the coming week.

Besides, fluctuations in rupee value, combined with cues from the US Federal Reserve over the likely rate hike and further developments on the demonetisation drive will be other major themes for the week starting from November 14.

"This week the markets would focus on the rise in the US treasury yield, more details of the plans coming from the President elect of the US, the USD appreciation and the US Fed rate rise expectations," Devendra Nevgi, Chief Executive of Zyfin Advisors, told IANS.

"All of these factors are imporant for the global risk appetite and flows into the emerging markets, such as India."

"Domestically, the markets would adjust to the impact of the demonetisation measures on the economy and the cash intensive companies. Earnings would be key too."

Furthermore, the heightened expectations of a possible rate-hike in the US will keep investors jittery.

A hike can potentially lead foreign portfolio investors (FPI) and funds away from emerging markets such as India.

It is also expected to dent the business margins of corporate sector, as access to capital from the US will become more expensive.

"Expectations of fiscal expansion by Trump's regime shall not only put a cloud on EM equities for fear of outflows, but the US inflationary outlook has also received a boost thereby giving FOMC (Federal Open Market Committee) more room for hiking rates when it meets in December," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, told IANS.

"This would mean that next week's inflation figures will be closely in focus especially with RBI (Reserve Bank of India) scheduled to announce monetary policy early December."

India's Central Statistics Office (CSO) is expected to release the macro inflation data points - Consumer Price Index (CPI) for September.

The CPI will be followed by the release of Wholesale Price Index (WPI) by the Ministry of Commerce and Industry.

"In coming week, markets will keep a eye on inflation data to be announced on Monday, November 14," Astha Jain, senior research analyst at Hem Securities, told IANS.

"On the global front, the US industrial production data for the month of October 2016 will be a key data to watch, which will get declared on Wednesday November 16."

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, domestic investors will closely track FII (foreign institutional investors) fund movement in the Indian equities markets.

In terms of investments, provisional figures from the stock exchanges for the week ended November 11, showed an outflow of Rs 3,923.92 crore in foreign funds.

Figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) were net sellers of equities worth Rs 1,670.71 crore, or $250.47 million from November 7-11.

"Indian equity markets are likely to be volatile due to short covering at lower levels in the coming sessions," Desai added.

The key Indian equity indices had plunged by more than 1.50 per cent each during the week ended November 11, as surprise victory of Republican Donald Trump in the US Presidential election, along with government's sudden move to demonetise Rs 500 and Rs 1,000 notes, spooked investors.

In addition, weak rupee and lower crude oil prices, combined with the political and economic backlash of the demonetisation move and outflow of foreign funds had subdued investors' sentiments.The 30-scrip sensitive index (Sensex) of the BSE closed the week's trade with a loss of 455.33 points or 1.67 per cent to 26,818.82 points.

Similarly, the 51-scrip Nifty of the National Stock Exchange (NSE) receded by 137.45 points or 1.63 per cent to 8,296.30 points.

The Indian equity markets will be closed on November 14, Monday on account of Guru Nanak Jayanti.

(Rohit Vaid can be contacted at rohit.v@ians.in)

--IANS

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