The week ahead is likely to remain volatile for the local equity markets due to expiry of F&O (futures and options), which is due on November 24, 2022. On the economic data front, market participants will keep an eye on overseas. Exchange reserves data will be released on November 25 for further signals. India’s foreign exchange reserves declined to $529.990 billion on November 4 from $531.080 billion in the previous week. Meanwhile, market participants will also closely watch the investment trend by FIIs and the movement of the rupee against the dollar.
Dr Joseph Thomas, head of research at Emkay Wealth Management, said: “Markets will await statements from key Fed officials on developments in Europe and the Federal Reserve’s future stance. While price pressures have eased, retail inflation numbers remain close to those of central banks.” Too much for comfort, especially in the US and India.”
At the same time, he added, the dominant view is that perhaps inflation has peaked and central banks may still hike rates but the quantum of hike will be more moderate. “Some signs of a slowdown in growth may soon be visible due to the aggressive rate action in the past few months. Markets will focus on the real numbers to understand the momentum of inflation and official policy,” Thomas said.
On the global front, investors will be watching some economic data from the world’s largest economy, United States (US), starting with Chicago Fed National Activity Index on November 21, Redbook and Fed Meester speech on November 22, API Crude Oil Stock Will be from Change, Initial Jobless Claims, S&P Global Manufacturing PMI, S&P Global Services PMI, S&P Global Composite PMI, New Home Sales, EIA Crude Oil Stocks Change, Baker Hughes Total Rig Count Nov 23 and FOMC Nov 24 minutes.
Vinod Nair, Head of Research, Geojit Financial Services, said, “During the week, the direction of the domestic market was largely driven by the trend of global peers. Global markets were rising on the expectation that Fed will reduce its aggressive rate. US Inflation The rise was in response to lower U.S. data. However, the euphoria was dashed by better US retail sales in October and accommodative comments from Fed officials. Domestic CPI inflation eased to 6.8% due to a decline in food and commodity prices. The CPI, however, remains above the tolerance level of the Reserve Bank of India is projected to fall within the range from Q1 FY24 onwards.
“While domestic macroeconomic indicators and FII inflows are favourable, negative vibes from global markets and premium valuations compared to peers, the domestic market traded with caution. In the absence of major domestic triggers, the domestic market is expected to continue its focus on global trends. Keeping in view the current market scenario, a balanced approach with a mix of equity and debt, 60:40 is advised for the average risk-averse investor, as interest yields are getting attractive, and the economy is slowing Nair said.