Top five factors that are likely to chart market direction this week

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NEW DELHI: It was an eventful week for Indian market as Nifty50 touched a fresh 52-week high of 8,892.15 on Thursday and closed 1.3 per cent higher for the week ended February 23. The S&P BSE Sensex gained 1.5 per cent during the same period.

The rally in the index was led by index heavyweights such as Tata Consultancy Services, Axis Bank, Reliance Industries, Idea Cellular and Bharti Airtel.

India market could start on a flat note on Monday tracking SGX Nifty and trend in global markets. The Indian market was shut on Friday on account of Mahashivratri. US stocks ended higher while most of the Asian markets closed on a negative note.

The Nifty50 futures on the Singapore Stock Exchange were trading 35 points lower at 8,936, indicating a flat opening for the domestic market.

There could be some stock specific action, but largely the next week will be guided by liquidity flows, as well as macro data such as gross domestic product, car sales, and PMI data scheduled to be announced this coming week.

“The next week will mark the beginning of the new month and lot of macroeconomic data viz. core sector data, Nikkei India Manufacturing PMI and Services PMI are lined up. Also, we have auto sales figures for the February month scheduled,” Jayant Manglik, President, Retail Distribution, Religare Securities Ltd told ETMarkets.com.

“With the beginning of the new expiry, we might see some profit taking in index first, however, we’re bullish on markets and expect to see a new record high soon. It is still buy on dips market,” he said.

Going by the buzz on Dalal Street, here is a list of five factors that could chart market direction during the week:

February auto sales numbers
Four and two-wheeler stocks will be in focus in the coming as auto sale numbers for the month of February will be announced starting from March 1. Stocks like Maruti Suzuki, Hero MotoCorp, Bajaj Auto and Ashok Leyland will be on the watch list.

December quarter GDP Data
The Government will release the December quarter GDP data on Tuesday, February 28. Most analysts expect the GDP data to hover below the 6 per cent mark in the third quarter of the current financial year. The GDP had risen to 7.3 per cent in Q2, September 2016.

A Reuters poll of 30 economists taken over the past week showed India’s gross domestic product growth slowed to 6.4% annually in the October-December quarter. Several economists were uncertain about the full impact of the currency ban.

“We expect the GDP growth to be decisively lower than 6 per cent in Q3 at 5.8 per cent and 6.4 per cent in Q4,” SBI Research said in a report.

“Overall, our estimate for H2 is 6.1 per cent with a downward bias against CSO’s 7 per cent and the fiscal 2017 growth at 6.6 per cent,” it said. The good news is that next year growth could move up faster if demand comes back faster post-remonetisation, it added.

Macro Data
Markit Economics, an independent, global provider of some of the world’s most influential business surveys will unveil the result of a monthly survey on the performance of India’s manufacturing sector for February 2017 on Wednesday.

Manufacturing sector activity rebounded in January. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 50.4 in January from 49.6 in December.

It will also unveil the result of a monthly survey on the performance of India’s services sector on Friday. The seasonally adjusted Nikkei India Composite PMI Output Index rose from December’s 38-month low of 47.6 to 49.4 in January.

Infrastructure output data for the month of January will be unveiled on Tuesday, February 28 post market hours. India’s annual infrastructure output growth accelerated to 5.6 per cent in December from 4.9 per cent in the previous month.

Global Cues
US President Donald Trump is likely to announce its tax plan in the next few weeks. US market has been rallying well in expectation of a cut in corporate tax from 35 per cent presently.

“This is an unknown risk if the reform is below expectation,” Vinod Nair, Head of Research, Geojit Financial Services told ETMarkets.com.

“While the FED minutes has pointed only a gradual rate hike which is positive for India as in the short term the weakness in USD is likely to continue,” it said.

Apart from any news on Tax rates, data on preliminary estimates of US Q4 December 2016 gross domestic product (GDP) will be announced on Tuesday.

Technical Factors
The market continued its winning streak for the fifth straight week and has now closed tad below the 52-week high. The weekly chart looks extremely encouraging as it witnessed a completion of ‘Bullish Cup and Handle’ pattern.

In addition, the ‘RSI-Smoothened’ oscillator on the weekly chart has now sur-passed the 70 mark by a small margin. This development of the ‘RSI-Smoothened’ certainly augurs well for our markets.

“We continue with our optimistic stance and expect the index to hit a new all-time high soon. For the forthcoming week, we expect an immediate range of 8982 – 8826 for the Nifty50, Sameet Chavan, Technical Analyst at Angel Broking told ETMarkets.com.

“In the case of a dip towards the lower end of the range, traders are advised to initiate long positions for the targets beyond the 9,000 mark. We would reiterate that the trend is strong and hence, one should look to ride the tide instead of wasting too much time getting worried about an overbought condition of the market,” he said.