How will US Fed and BoE rate action affect markets this week?

Domestic equity markets clocked modest gains in the week gone by, amid quarterly earnings announcement and steady foreign flows.

Frontline indices Nifty50 and the S&P BSE Sensex added up to 1.2 per cent in four trading sessions. They were supported by stock-specific movement across autos, banks, metals and tech.

Broader markets were upbeat, too, in trade during the same period. The S&P BSE MidCap, and the S&P BSE SmallCap indices logged a gain of 1 per cent and 0.4 per cent, respectively.

Going into this week, interest rate decisions by the US Federal Reserve and the Bank of England will guide markets trajectory.

According to a Reuters poll, analysts expect the global central banks to hike interest rates by 75 basis points each to rein persistent inflation. Markets, on their part, have already priced in the expected rate increases.

Nishit Master, Portfolio Manager, Axis Securities PMS, US Fed, BoE likely to raise rates by 75 bps. 75 bps rate hike priced in by markets. BoE may surprise and hike interest rate by 1%. Bullish on capital goods, banks, consumer discretionary. 

Back home, investors will track the Reserve Bank of India’s additional meeting, which it has called on November 3. 

The MPC will deliberate on its response to the government, explaining why the target to retain retail inflation was missed for three consecutive quarters.

Meanwhile, the ongoing results season will continue to take centre-stage companies like Tata Steel, Adani Ports, Nykaa, PNB, Sun Pharma, Tech Mahindra, Adani Transmission, Adani Enterprises, HDFC, Hero MotoCorp, Cipla, Titan, SBI and Bank of Baroda, among many others will report the July-September quarter results this week.

That apart, manufacturing and services PMI numbers from across the globe will be tracked too.

On the technical front, charts suggest the S&P BSE Sensex can leap nearly 2,000 this week, and attempt to reclaim 62,000-mark, with 59,000 acting as support.

As regards Nifty, a close above 18,000 could trigger a next leg of rally towards 18,400 levels, with 17,600 acting as immediate support.