Live Sensex and Nifty coverage: Market Outlook - Economic stimulus to influence equity indices' movement

Last Updated: Sun, Sep 24, 2017 12:36 hrs
Market

Today: Petrol Price | Diesel Price

Live Markets Commentary:



Sify Editors @ 1:30 PM
Market Outlook: Economic stimulus to influence equity indices' movement

Expectations of an economic stimulus package, along with derivatives expiry and movement of foreign funds, are expected to drive equity investors' sentiment next week.

According to market observers, other major factors, such as the government's plans to recapitalise public sector banks and a volatile geo-political situation in the Korean Peninsula will also influence market movements.

"Markets' sentiment next week would be dominated by what the government offers as stimulus to the economy, especially how it balances the goals of pump-priming the economy yet keeping inflation and fiscal deficit under control," said Devendra Nevgi, Chief Executive, Zyfin Advisors.

"Global markets and the situation in North Korea will be closely watched."

Apart from global geo-political issues, derivatives expiry on September 28, Thursday, and likely outflows of foreign funds will be other major themes for the week ahead, experts opined.

"Markets are likely to remain volatile in the next week ahead of the expiry of September derivative contracts as traders roll over positions to the October 2017 series," D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.

"Nifty is expected to move in the range of 9,900-10,150 levels in the next week."

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) continued with their selling spree and off-loaded stocks worth Rs 5,448.66 crore during the week ended September 22.

Figures from the National Securities Depository Ltd (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 3,911.21 crore during September 18-22.

However, domestic institutional investors (DII) bought scrips worth Rs 3,581.88 crore.

"Though DIIs flows are very strong, but any earnings hiccups in coming quarters may limit these inflows," said Vinod Nair, Head of Research, Geojit Financial Services.

"Going ahead, the markets will look for more cues from government on its stimulus programme and road map on fiscal deficit. Any sharp depreciation of INR will heighten the FIIs outflow."

On a weekly basis, the Indian rupee had weakened by 72 paise to close on last Friday at 64.80 to a US dollar from its previous week's close at 64.08.

In addition, investors will take further cues from macro-economic data points like the Index of ECI (eight core industries) for August 2017, external debt and the country's fiscal deficit which will be released next week.

As per technical analysis, on a downside, the Nifty is expected to further consolidate towards its next support level of 9,861 points.

"Traders will need to watch if the Nifty can now hold above support (level of 9,950 points) early next week; else a further correction is likely towards the next supports of 9,861 points," elaborated Deepak Jasani, Head of Retail Research for HDFC Securities.

"On an up-move, 10,000-10,040 points band can provide resistance."

Last week, subdued macro-economic sentiment, coupled with rising tensions in the Korean peninsula dragged the two key indices -- the BSE Sensex and the NSE Nifty -- below their psychologically important levels of 32,000-points and 10,000-points, respectively.

Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE declined by 350.17 points or 1.09 per cent to 31,922.44 points.

Similarly, the Nifty 50 of the National Stock Exchange (NSE) edged lower to 9,964.40 points, down 150.6 points or 1.19 per cent.


Sify Editors @ 10:30 AM
Market Review: Subdued economic sentiment weighs heavy on equity indices

Subdued macro-economic sentiment, coupled with rising geo-political tensions in the Korean Peninsula and continuous outflows of foreign funds dragged the key Indian equity markets in the red last week.

Consequently, the two key indices -- the BSE Sensex and the NSE Nifty -- receded below their psychologically important levels of 32,000-points and 10,000-points as investors were spooked over a possibility of government exceeding its fiscal deficit target to stimulate the economy.

On a weekly basis, the 30-scrip Sensitive Index (Sensex) of the BSE declined by 350.17 points or 1.09 per cent to 31,922.44 points.

Similarly, the Nifty 50 of the National Stock Exchange (NSE) edged lower to 9,964.40 points, down 150.6 points or 1.19 per cent.

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, rising geo-political tension eroded investors' risk-taking appetite and subdued global and domestic markets.

"Geo-political tensions, continue to take centre stage, as things have gone from bad to worse," Desai said.

Besides geo-political tensions, FOMC (Federal Open Market Committee) minutes dampened investors' sentiments. The US Fed has indicated that there will be one rate hike in December 2017 and three in 2018.

A likely US rate hike can potentially drive away foreign portfolio investors (FPIs) from emerging markets such as India.

"Domestic markets became nervous after the US Federal Reserve outlined plans to unwind its $4.2 trillion balance sheet starting next month," D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.

"The domestic currency hit 65 levels against the US dollar for the first time in more than five months on the back of speculation about the government going in for a fiscal deficit relaxation, with talk of a Rs 40,000-Rs 50,000 crore stimulus."

Provisional figures from the stock exchanges showed that FIIs continued with their selling spree and off-loaded stocks worth Rs 5,448.66 crore during the week.

However, domestic institutional investors bought scrip worth Rs 3,581.88 crore.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 3,911.21 crore, or $354.46 million, during September 18-22.

On the currency front, the Indian rupee weakened by 72 paise to close the week at 64.80 to a US dollar from its previous week's close at 64.08.

Market observers added that liquidity was redirected from equities to insurance IPOs of ICICI Lombard and SBI Life.

"During the week Insurance IPOs of ICICI Lombard and SBI Life sucked some liquidity from markets, FII flows remained negative... Indian rupee became weak against the US dollar along with most of Asian currencies," said Anita Gandhi, Whole Time Director at Arihant Capital Markets.

"Macro factors like fiscal deficit, CAD, inflation and new employment generation indicated weakness."


More from Sify: