Bull vs Bear: Due to weak global cues, the bears kept their hold on Dalal Street – dragging the Nifty 50 index below the 16,000 level. The entire week was bearish on the Indian stock market as minor volatility sold out within minutes and Nifty fell nearly 4 per cent during the week to end below 15,800 levels. Interestingly, in this weak market, most of the positions created by FIIs are on the short side and their ‘long short ratio’ is at its lowest level in the index futures segment which has not been seen for quite some time. The sectoral indices too have shown no signs of reversal or bottom out so far.
Advising investors to avoid any kind of haste and draw conclusions about the same market downRuchit Jain, Lead Research, 5paisa.com said, “The sectoral index also has not shown any signs of reversal or bottom out so far. The banking index showed some relative strength at the start of the week, but eventually resumed the downtrend. Given. Weekly closing day and day after day. Thus, here also the trend remains negative and since no divergence has been observed so far, one should not be in a rush to bottom-fish.”
Speaking on the key triggers that will impact the stock market next week, Anuj Gupta, Vice President – Research, IIFL Securities said, “The week ended Friday was the worst in the last two years. Dollar index hit 20-year high and It crashed. Commodity prices were one of the major reasons for the equity market crash this week. Both of these are expected to dictate the global markets including Dalal Street next week also. Will have to keep an eye on the upcoming company results as well.”
Here we are listing down the top 5 triggers that can affect the stock market next week:
1]Dollar Index: The impressive rally in the dollar index continued this month, reaching a 230-year high this week. Therefore, investors are withdrawing money from equities and other investment instruments and putting money in US dollars. Therefore, the momentum of the index will be important in the immediate term and hence investors and traders are advised to keep an eye on the dollar index.
2]Fall in the Price of Commodity: “Commodity prices fell abruptly last week, leading to a fall in metal stocks. Stocks such as SAIL, VEDL and Hindalco were the worst performers in the past week. Continuity of the direction and volatility of commodity prices is the key to the fate of metals. and the linked sector,” said Sonam Srivastava, founder, Wright Research.
3]Rupee Vs Dollar: “Last week, Indian National Rupee (INR) fell to record fresh selling low triggered by FIIs. If rupee continues to weaken then FII selling may further intensify and hence rupee-dollar divergence is a key factor which Could dictate the stock market next week.” Anuj Gupta of IIFL Security said.
4]US Retail Sales Data: This is going to affect the US dollar directly and any move in the dollar can easily lead to profit-booking in dollars. Therefore, US retail sales data is an important factor that could affect the stock market next week.
5]Q4 Result: Sonam Srivastava of Wright Research said, “We are in the middle of earnings season. Several companies including IOC, DLF, ITC, Lupine etc. will post earnings next week, which may decide the fate of many sectors.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.