Fed policy action, RBI rate decision key driving factors for markets: Analyst

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Besides these, the September quarter earnings announcements will also pave the way for markets whose overall structure remains bullish, he said.

The Sensex has so far jumped 16.91 per cent from its 52-week low of 50,921.22 quoted on June 17 this year. The Nifty has climbed 16.96 per cent from its 52-week low of 15,183.40 on June 17 this year.

So far in 2022, the BSE Sensex has gained 2.20 per cent and Nifty 2.33 per cent.

Sunil Damania, Chief Investment Officer, Marketsmojo, said, “We believe the underlying market is bullish. Given India’s position as a high-performing economy, there are several reasons for India’s outstanding performance.”

He said the rupee has stabilized after hitting an all-time low.

The rupee is currently hovering at 79.50 against the US dollar. In intra-day trade on Monday, it had touched an all-time low of 80.15 against the US dollar.

“We are of the view that even if the market touches a record high in September, the market sentiment will remain bullish till Diwali,” Damania said. The BSE benchmark Sensex and NSE Nifty have risen since mid-June 2022.

At the moment, investors may be skeptical of the current market rally, Damania said, adding, “We believe the Sensex may touch 65,000 by December 2022, and our short-term Nifty target is 19,000 by December 2022.”

Experts said that factors affecting the direction of global markets include geopolitical issues, commodity prices, inflationary trends, interest rate trajectory by central banks and bearish conditions.

According to Deepak Jasani, Head of Retail Research, HDFC Securities, Indian markets could be affected by changes in global sentiment and more investors risk aversion before the historically low month of September.

“However, the intensity and magnitude of the decline in India will be limited as its economy may not be fully linked to events in the US economy,” he said.

Jasani said that from now till the end of the calendar year, Nifty can see an increase of 18,100 and a fall of 15,850.

Reshma Banda, Head-Equity and Executive VP, Bajaj Allianz Life Insurance said Indian macroeconomic fundamentals are positioned better on a relative basis.

Banda said inflation in India has risen and is only marginally higher than the RBI threshold band, which is favorable as compared to other developed countries where inflation is hovering at several decade highs.

According to official data, India’s retail inflation eased to 6.71 per cent in July on softening food prices, but remained above the Reserve Bank’s comfort level of 6 per cent for the seventh consecutive month.

Some of the other factors influencing the market sentiment include normal monsoon, which augurs well for controlling the level of food inflation in the country.

Besides, foreign fund inflows have returned to India, supporting a healthy rally in equity markets, experts said.

After becoming net buyers last month, foreign investors have become aggressive buyers of Indian equities and have joined 49,250 crore so far in August on improving corporate earnings and macro fundamentals.

Sunil Nyati, Managing Director, Swastik Investmart Ltd said, “Indian equity benchmark indices are witnessing profit-booking after a spectacular rally of around 17 per cent from June lows.

Nyati said that historically September has been a weak or edge month for Nifty and Sensex, but in the month of October or near Diwali, Nifty and Sensex can reach their new highs.

On the global front, the market will be tracking economic data and geopolitical conditions, while on the domestic front, earnings, festive season demand and FII behavior will be key factors.

The Fed’s September policy action is an important factor that markets will consider till Diwali.

US Federal Bank President Jerome Powell has indicated that the central bank will stick to a rate hike strategy to quell inflation.

Some experts feel that the market is poised for aggressive rate hikes and most of it is already discounted, while any relief on the inflation front could improve investor sentiment.

This story has been published without modification in text from a wire agency feed.

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