Ahead of Market: Factors to consider before trading begins next week

Ahead of Market: Factors to consider before trading begins next week

With the third quarter earnings calendar coming to an end this week and with no major domestic trigger in sight, global trends and foreign fund movement will be in focus in the upcoming week.

FPJ Web DeskUpdated: Sunday, February 19, 2023, 11:17 AM IST
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Ahead of Market: Factors to consider before trading begins | Image: Wikipedia (Representative)

The markets for the third consecutive week maintained its upward journey. Sensex closed a little above the 61,000 mark whereas Nifty was at 17,944, but with the third quarter earnings calendar coming to an end this week and with no major domestic trigger in sight, global trends and foreign fund movement will be in focus in the upcoming week.

"Global cues and F&O expiry may cause volatility this week. Although FIIs have shown some interest in purchasing over the past few days, there were a few block purchases last week, so their flow will be crucial," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

FPIs

FPIs buying helped the market move upward the last week, but with the hawkish comments by Fed officials and the rising US dollar index the consolidated trend is not yet over.

FPIs turned net buyers last week with an investment of over Rs 7,600 crore against net outflows of Rs 3,920 crore in the preceding week. This purchase was largely due to certain block purchases. This data will be important as it has been volatile for several months.

Federal Open Market Committee (FOMC) Minutes

The FOMC minutes of the February policy meeting are scheduled to be released on Thursday, which will play a key role in the market. It is also expected that there will be more rate hikes due to the increasing inflation. According to a report by CNBC, in the previous week, Fed Governor Christopher Waller, when talking about inflation, said that the Fed needed to maintain its current plan of action. He also added, "It might not be a long fight, with interest rates higher for longer than some are currently expecting. But I will not hesitate to do what is needed to get my job done."

Since March 2022, Fed has announced a total of eight interest hikes taking it to the highest levels since October 2007. IT is further expected to go beyond 5.5 per cent in the next policy meeting.

The Federal Reserve is targeting to get the inflation at two per cent from the current levels.

Monetary Policy Meeting Minutes

The Reserve Bank of India is also expected to release the minutes of its February monetary policy meeting on Wednesday. RBI's Monetary Policy Committee on February 8 raised the repo rate to 6.5 per cent up by 25 basis points due to the rising inflation. The central bank revised the GDP forecast for financial year 2023 to 7 per cent from the earlier 6.8 per cent. RBI also lowered the inflation forecast from 6.7 per cent to 6.5 per cent.

Foreign Exchange Reserves

The data for foreign exchange reserves for the week that ended on February 17 will be released on Friday. Forex reserves went down for the second consecutive week at $566.95 billion for the previous week that ended on February 10. This was below the $8.32 billion the RBI said in its Weekly Statistical Supplement. For the earlier week it had dropped by $1.49 billion.

Deposit and bank loan growth

The deposit and bank loan growth number for the fortnight ending on February 10 will be released on Friday.

Indian Rupee

The Indian rupee has been making a comeback to near 83 after it moved down to 81 last month. On Friday, Indian rupee closed at 82.83 a dollar, while it was at 81.12 on January 20.

Brent crude oil

Brent crude oil movement would also be in focus this week. Brent crude futures closed at $83 a barrel down from the earlier $86.39 amid fear of US interest rate hikes.

"With all major events behind us, the performance of the global markets, especially the US, will be in focus for cues. Besides, crude and rupee movement will continue to offer indications in between," Ajit Mishra, VP Technical Research, Religare Broking Ltd, said.

With input from PTI

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