Q2 earnings, FOMC minutes among top 9 factors to guide markets this week

Midcap and smallcap peers outperformed the headline peers rising up to 3 per cent during the week, while the fear gauge India VIX dropped about 6 per cent slipping below the 19-levels.

Among the sector performers, media stocks zoomed 5 per cent, whereas IT, realty and metal stocks surged 3 per cent each. FMCG emerged as the only weaker pack during the week.

The recovery in the global indices, especially the US, has triggered the recent rebound but the lack of sustainability in the move is causing excessive volatility, said Ajit Mishra, VP – Research,

Broking.

“However, we feel domestic factors like earnings and macroeconomic data may take the front seat and dictate the trend ahead,” he added. “Since all the sectors are witnessing traction on a rotational basis, the focus should be on the top-performing counters from the respective sectors and accumulate them on dips.”

Market participants believe that the host of factors including US FOMC meeting, inflation numbers of India and US, Q2 earnings, movement of crude and rupee coupled with FII flows will guide the market in the coming week.

Here are the factors that will impact the markets in the coming week:


FOMC minutes of meeting

The US Federal Reserve will release its minutes of meeting for the last meeting on Wednesday, when it announced a rate hike of 75 basis points. Markets will be looking at the commentary from the Fed members in order to tame the rising inflationary pressure.

Fed chair Jerome Powell went on to reiterate that the FOMC were ‘strongly committed’ to driving inflation lower, while signalling that more rate rises are on the way. Powell added that there was no painless way to drive inflation lower.


Macroeconomic numbers

India will announce its macroeconomic indicators including industrial output and inflation numbers in the coming week, which are likely to guide the course of action in the days to come. Inflation numbers have eased mildly recently, but any negative surprise may dent the sentiments.

Along with India, the US will also announce the inflation data in the coming week. The rising prices in the world’s largest economy have led to a sharp rise in the interest rate. Another report red-hot prices will lead to the US Fed becoming more hawkish.


Geopolitical worries

The tensions between Russia and Ukraine have sparked up once again after a car bomb has broken out on a key road and rail bridge linking Crimea to Russia. This attack is likely to re-ignite the geopolitical concerns between the two countries once again.

The bridge, which was built on the orders of Russian President Vladimir Putin and inaugurated in 2018, was a key transport link for carrying military equipment to Russian soldiers fighting in Ukraine, especially in the south, as well as ferrying troops there.


Q2 earnings

India Inc will officially kick off the earnings season for the quarter ended on September 30, 2022 as IT major

will announce its results on Monday, October 10. Other blue chips including HCL Tech, Wipro, Infosys, , and will also announce their quarterly earnings.

Among other companies,

, GM Breweries, , Nxtdigital, , Angel One, Cyient, , , , , Larsen & Toubro Infotech and will also release their quarterly numbers.

Crude oil

The latest rise in crude oil is hurting the sentiments for an import oriented economy like India, who is highly dependent on overseas crude for its energy needs. The big orders of crude take off a big chunk of India’s forex reserve.

India’s foreign exchange reserves fell by $4.85 billion to $532.66 billion for the week ending Sep 30, according to data released by the Reserve

. The foreign exchange reserves fell to their lowest level since July 2020.

Sugandha Sachdeva, Vice President – Commodity & Currency Research, Religare Broking said that Crude oil prices have perked up to a three-week high as OPEC+ producers have decided to cut oil output by 2 mbpd, the largest production cut since 2020.

Movement in Rupee

The Indian currency has been on a free fall recently, hitting new record lows regularly, dropping more than 11 per cent since the beginning of the year.

The rise in crude oil prices, higher bond yields and upsurge in the US dollar index have dented the sentiments for the Indian currency. While FIIs selling pressure abated, a depreciating rupee put pressure on equities as the rupee made fresh lifetime lows.


FII flows

Global investors have not decided the direction of their flows. After a sharp selling in September, they have turned net buyers in October. FiIs sold equity to the tune of Rs 7,623 crores in September mainly on account of dollar appreciation, whereas they turned into buyers in October to the tune of Rs 2,440 crore.

VK Vijayakumar, Chief Investment Strategist,

said that the reiteration of the hawkish stance by the Fed and the declaration that “monetary tightening would continue till the job is done” led to sustained rise in the dollar and capital outflows from most emerging markets.

Tracxn Technologies IPO

The Rs 309.38-crore initial public offering (IPO) of Tracxn Technologies, market intelligence data analytics provider, will kick off for subscription between October 10-12. The company will sell its shares in the range of Rs 75-80.

Technical Outlook

The Nifty ended the week marginally above 1 per cent. Following a hefty battering from 18,100 levels a few weeks ago, it appears that the bulls are finally making a comeback, said Apurva Sheth, Head of Market Perspectives, Samco Securities.

“The bulls are expected to maintain 17,000 for the month of October before attempting to retest at 18,100,” he added. “Short-term resistance is positioned at 17,500 levels.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)