“The Indian market is increasingly witnessing severe bouts of volatile trading, as the gyration from positive to negative zones has been very sharp owing to stretched valuation concerns and the lingering selloffs from foreign investors. Despite the recovery, there is no firm trend visible due to lack of fresh positive triggers,” Prashanth Tapse of Mehta Equities said.
Analysts expect the market to continue making a sideways movement for next 6-12 months so that the earnings catch up with the valuations.
For this week, here are 8 key factors to watch out for:
1) GDP data
The market will first react to the weak Q2 GDP data for India which came at 5.4% against an expectation of 6.5%.
However, much of the slowdown appears to be priced in, and the weak data may compel the Reserve Bank of India (RBI) to consider rate cuts sooner than expected, Santosh Meena, Head of Research, Swastika Investmart, said.Also read | NSE changes monthly expiry days for Nifty Bank, 3 other F&O contracts to Thursday
2) Auto sales
Auto stocks will remain in focus on Monday as companies release their monthly sales figures. The expectations are high this time due to the festive and wedding season.
3) FII selling
Amid a weak Q2 earnings season, foreign institutional investors (FIIs) sold stocks worth around Rs 26,000 crore in November but the pace of selling slowed down as compared to Rs 94,000 crore in October. In the derivatives market, FIIs have starting the December series with 67% short positions in index futures.
“This opens up the possibility of a short-covering rally. Historically, December tends to be a positive month for the markets, which could provide a supportive backdrop,” Meena said.
4) RBI meeting
The upcoming RBI policy on December 6 will be crucial, as investors await clarity on the start of rate cuts especially as growth momentum slowed in H1FY25 even as inflation rebounded in the last couple of months due to higher food prices.
Though the consensus shows status quo, the probability of a rate cut in February is high due to the subdued growth in Q2, analysts said.
5) Technical
Nifty is facing a lot of resilience around 24,350 levels for the past couple of days on an immediate basis.
“We need to see a decisive close above 24,350 levels for further strength in Nifty or else we believe that consolidation is likely to continue in the range of 24,000 to 24,350 levels. Support for Nifty is now seen at 24,000 and 23,750-800. On the higher side, immediate resistance for Nifty is at 24,350 level and the next crucial resistance zone is at 24,500-550 levels,” said Tejas Shah, Technical Research, JM Financial & BlinkX, said.
6) Global cues
On the global front, geopolitical tensions, particularly the Russia-Ukraine situation, remain a concern. However, the cooling of the dollar index and US bond yields in recent days is generally favorable for emerging markets like India, experts say.
7) Macro data points
The outlook for the market will be guided by the major domestic and global economic data such as India Nikkei S&P Global Manufacturing PMI (Nov), India Nikkei Services PMI (Nov), India Interest Rate Decision, US S&P Global Composite PMI (Nov), US Manufacturing PMI (Nov), US ISM Non-Manufacturing PMI (Nov), US Services PMI (Nov), US JOLTS Job Openings (Oct), US Nonfarm Payrolls (Nov), US Initial Jobless Claims, US Unemployment Rate (Nov).
8) Crude oil
Brent crude declined by 4% during the week in anticipation of reduced tensions in the Middle East. An ease in oil prices will continue to aid operating metrics of Indian companies in the coming quarters, Geojit’s Vinod Nair said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)