The coming week is going to be crucial as investors will be eyeing the Services PMI to be released on December 05. The S&P Global India Services PMI ranged from September’s six-month low of 54.3 to 55.1 in October 2022. Also, traders will be waiting for the Reserve Bank of India’s (RBI) interest rate decision, which will be announced on December 07. There are expectations that RBI may increase the repo rate. Traders will also look for the forex reserves data to be released on December 09.
Besides this, the finance ministry has called a meeting of chief executive officers (CEOs) of banks, including top six private sector lenders, on December 5 to discuss ways to promote cross-border trade in rupees instead of the US dollar. Meanwhile, after the first phase of Gujarat assembly elections, the second phase of elections for 93 seats will be held on December 5, the results of both the phases will be out on December 8.
Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said: “FPIs turned strong buyers in November, consistently buying financials, IT, auto, FMCG, capital goods and telecom. They were sellers in financials in October, but in November There were buyers. There is no consistency in their regional selling strategy. In the short term, the most important factor determining the FPI strategy is the movement in the dollar index.
“When the dollar index rises and is expected to rise, they sell. Conversely, when the dollar index declines and are expected to fall, they buy. Going forward, India will get its fair share of FPI money .. But higher valuations in India will be a deterrent,” he said.
On the global front, US traders will first watch Factory Orders, S&P Global Composite PMI, S&P Global Services PMI and ISM Non-Manufacturing PMI, Exports & Imports Data on 05 December and Redbook, API Crude Oil Stocks on 06 December. Change and EIA Crude Oil Stocks Dec 07, Initial Jobless Claims Dec 08, Producer Price Index, Wholesale Inventories, Fed Quarterly Financial Accounts and Baker Hughes Oil Rig Count Dec 09.
Market veteran Deepak Jasani, head of retail research at HDFC Securities, said: “Global stocks were cautious on Friday after recent sharp gains, as traders awaited the monthly US jobs report for clues on the Federal Reserve’s next policy moves and Concerns about economic growth resurfaced. In Europe. Gains of last few days are being digested and markets are looking at new data points to decide further direction. Realty stocks do well in India on broker upgrade Auto stocks move into profit taking zone after monthly sales numbers. During the week, Nifty gained 0.99%. Nifty may face resistance in 18758-18888 band while 18462-18529 band near term I can offer support.”
Sumit Pokharna, vice-president, fundamental research, Kotak Securities Ltd, said: “Given low crude oil prices, inflation expected to peak and monetary tightening expected to slow down, we are positive on equity markets but given the high valuations.” There will be further growth ahead. There may be a lull. We may see several triggers such as lower crude oil prices, lower fiscal deficit, higher government expenditure, pick-up in private capex, reformist budget and housing market revival which could drive growth in the medium to long term. can support the markets.
“In the recent rally, the mid-cap and small-cap indices, however, underperformed the large-cap indices. Hence mid-cap companies can be seen with strong management pedigree, business moat, strong cash flow but short term headwinds leading to valuation correction. At this point of time, investors should take a stock specific outlook instead of focusing only on Nifty. Focus on quality companies across sectors that have strong growth potential and reasonable valuations. Just to highlight, IT valuations have become more attractive,” Pokharna added.