Macro-data to drive equity markets

Mumbai, Dec 31 : Macro-economic data points coupled with the direction of foreign fund flows and fears of higher inflationary pressure are expected to influence the Indian equity markets during the upcoming week.

According to market observers, triggers such as the global geo-political situation and crude oil price movement can unleash volatility.

"The markets next week would start with the PMI (Purchasing Managers' Index) data for advance clues on where the manufacturing and services economy is going," Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.

"As global investors mostly return to work late in the next week, the fresh year's allocations would be critical. Markets would also look for support from domestic investors continuing in the new calendar year. Crude oil prices have already breached $66.5 per barrel, this combined with higher inflationary expectations may dampen the sentiment."

Key macro-economic data points like the monthly automobile sales' numbers, eight core industries' (ECI) output, PMI manufacturing and services' figures will be released during the week staring January 1, 2018.

According to D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors: "Macroeconomic data, trend in global markets, investment by foreign and domestic investors, the movement of rupee against the dollar and crude oil price movement will dictate trends on the bourses in the first week of the new year."

Analysts opined that the direction of foreign fund flows and near-term trends in the rupee's movement against the US dollar will also affect market sentiments.

Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) bought stocks worth Rs 1,676.07 crore, while domestic institutional investors (DIIs) purchased scrip worth Rs 25 crore during last week.

On the currency front, the rupee is expected to trade in the range of 63.60-64.10 to a US dollar. Last week, it had strengthened by 18 paise to closed at 63.87 to a greenback.

"The Indian rupee is expected to remain firm due to a weak dollar and healthy inflows into the Indian debt and equity markets. The immediate short-term range is expected to be between 63.60-64.10," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

On technical levels, the underlying trend of the National Stock Exchange's (NSE) Nifty remains bullish.

"Nifty is expected to trade between 10,400-10,650 levels while bank nifty is expected to trade between 25,300-25,850 levels," Aggarwal predicted.

Last week, the key Indian equity indices -- the BSE Sensex and the NSE Nifty50 -- rose for the fourth consecutive week.

Consequently, the 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange closed higher by 116.53 points or 0.34 per cent to 34,056.83 points.

Similarly, the Nifty50 of the NSE rose by 37.7 points or 0.35 per cent to 10,530.70 points.