Macro-data, global cues to drive stock markets

Mumbai: Macro-economic data points and the direction of foreign funds` flow are expected to influence sentiments of investors and set the tone for the Indian equity markets in the upcoming week, feel senior analysts.

Other important factors such as the geo-political situation in the Korean peninsula, rupee`s movement and government`s measures to tackle the non-performing assets (NPAs) will also have a major bearing on the stock markets.

Market observers pointed out that investors would take cues from the upcoming macro-economic inflation and industrial production data points.

The Central Statistics Office (CSO) will release the IIP (Index of Industrial Production) and CPI (Consumer Price Index) data points on September 12, Tuesday.

The CPI numbers will be followed by that of foreign trade figures and the release of WPI (Wholesale Price Index) data on September 14.

"Next week is going to be data heavy with the release of CPI, IIP and WPI. These are expected to have a major impact on the markets," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

"These macro-economic data points will also be viewed keeping an eye out on the earnings growth."

Besides the macro-economic data, geo-political developments and a slowdown in domestic investment flows are likely to make investors nervous.

"Global geo-political development, especially the one taking place in the Korean peninsula, will be keenly followed by the investors," Devendra Nevgi, the Zyfin Advisors Chief Executive, said.

"After large outflows of foreign funds, even domestic funds slowed down last week. This trend needs to be tracked as high prices, which are based mostly on PE expansion, might not sustain on such levels with a slowdown in domestic flows," Nevgi explained.

Provisional figures from the stock exchanges showed that DIIs (domestic institutional investors) bought scrips worth Rs 1,210.12 crore last week. But, foreign institutional investors (FIIs) continued with their selling spree and off-loaded stocks worth Rs 3,426.51 crore.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 3,409.13 crore, or $531 million, during September 4-8.

In addition to investments, Indian currency`s movement against the US dollar would be closely watched by investors. The Indian rupee strengthened by 23 paise on a week-on-week basis to close at 63.79 to a US dollar from its previous week`s close of 64.02-03. 

"A strong macro story and positive risk environment will continue to favour rupee. We expect a range of 63.70 to 64.20 over the near-term on spot," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

On technical levels, the NSE Nifty is in a consolidation phase in a range of 9,861-9,983 points, according to Deepak Jasani, Head - Retail Research, HDFC Securities.

"Further directional cues are likely to emerge on a move beyond this range," Jasani said.

Last week, global cues and sustained outflow of foreign funds dragged the key equity indices in the red after three consecutive weeks of gains.

Consequently, the 30-scrip Sensitive Index (Sensex) of the BSE declined by 204.71 points or 0.64 per cent to 31,687.52 points from its previous week`s close.

Similarly, the NSE Nifty50 closed at 9,934.80 points, down 39.6 points or 0.4 per cent.