Bull vs bear: On account of weak global cues, bear continued to hold their grip on the Dalal Street — pulling Nifty 50 index below 16,000 levels. Bears had a complete grip on the Indian stock market throughout the week as the minor pullbacks got sold into few minutes and Nifty lost almost 4 per cent during the week and ended below 15,800 levels. Interestingly, in this weak market, most of the positions built by the FIIs are on the short side and their ‘Long Short Ratio’ in the index futures segment is at its lowest which is not seen since quite some time. The sectoral indices too have not yet shown any signs of reversal or bottoming out.
Advising investors to avoid any kind of hurry and concluding about the market bottom, Ruchit Jain, Lead Research at 5paisa.com said, “The sectoral indices too have not yet shown any signs of reversal or bottoming out. The Banking index showed some relative strength at the start of the week but ultimately it resumed the downtrend on the weekly expiry day and the day after. Thus, the trend here too remains negative and since there’s no divergence seen yet, one should not be in a hurry to bottom-fish.”
Speaking on the major triggers that may dictate stock market next week, Anuj Gupta, Vice President — Research at IIFL Securities said, “The week ended on Friday was the worst in last two years. Dollar index rising to record 20 years high and crash in commodity prices were one of the major reason for equity market crash this week. These two are expected to keep dictating the global markets including Dalal Street next week as wll. One has to keep an eye on the upcoming company results as well.”
Here we list out top 5 triggers that may dictate stock market next week:
1] Dollar Index: The impressive surge in the dollar index continued this month and the index surged to 230-year high this week. So, investors are fishing out money from equity and other investment instruments and pumping money in US dollar. So, movement of the index will be crucial in immediate term and hence investors and traders are advised to keep a hawk eye on dollar index.
2] Crash in commodity price: “Commodity prices suddenly crashed last week, bringing down the metal stocks. Stocks like SAIL, VEDL, and HINDALCO were the worst-performing previous week’s stocks. The direction of the commodity prices and the continuation of volatility will decide the fate of Metals and linked sectors,” said Sonam Srivastava, Founder at Wright Research.
3] Rupee vs dollar: “Last week, Indian National Rupee (INR) tumbled to record low triggered fresh selling by FIIs. If rupee continues to remain weak then FIIs selling may further pick up momentum and hence rupee-dollar deviations is an important factor that may dictate stock market next week.” said Anuj Gupta of IIFL Security.
4] US retail sales data: It is going to affect US dollar directly and any ease in dollar may spark profit-booking in dollar. So, US retail sales data is an important factor that may impact stock market next week.
5] Q4 results: “We are in the middle of the earnings season. Many companies, including IOC, DLF, ITC, Lupin, etc., will post earnings next week, which could decide the fates of many sectors,” said Sonam Srivastava of Wright Research.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.