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The current week will be the final week of the calendar year. Domestic traders are likely to witness volatility due to F&O December series expiry slated during the week. In economic releases, market participants will track India’s infrastructure output or core sector data to be out on December 30, for further cues. India’s infrastructure output growth slowed sharply to 0.1 percent year-on-year in October 2022 from a downwardly revised 7.8 percent in the previous month. Also, current account deficit data will be released on December 30.
On the same day, the deposit growth, bank loan growth, foreign exchange reserves and external debt data will be released. Foreign Exchange Reserves in India rose to $564070 million in December 9 from $561160 million in the previous week. Meanwhile, Chandigarh will host two G20 meetings. The first meeting on finance is scheduled for January 30 and 31.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “FPI flows in December up to 24th indicate net investment of Rs 7278 crores (NSDL data). But if we exclude the buy figure of Rs 8977 crores on 1st December ( mostly bulk investment ), the net FPI investment in December stands at negative Rs 1699 crore. FPIs have turned cautious in recent days. Concerns about Covid spread in China is a negative sentiment and the strong economic data from the US indicate continuation of the hawkish stance of the Fed which is pushing bond yields up and equities down.”
“Only reversal of this trend will trigger a rebound in the market. In the first half of December, FPIs were buyers in autos, capital goods, FMCG and real estate stocks. They were sellers in consumer durables, oil and gas, power and financials. FPIs are likely to turn cautious in the near term. Macro data from the US and Covid news will drive FPI flows and the markets in the near term.” he added.
On the global front, the coming week will be holiday shortened as the US markets will remain close on December 26 on account of Christmas. Coming to economic data, investors will track goods trade balance, wholesale inventories on December 27, followed by redbook, pending home sales on December 28, API crude oil stock change, initial jobless claims, and EIA crude oil stocks change on December 29, and Chicago PMI, Baker Hughes total rig count on December 30.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said, “Domestic equity markets corrected last week reacting to negative global cues. Sensex 30 and Nifty 50 indices corrected 2% during the week, whereas the fall in the BSE midcap and NSE smallcap indices was much sharper. Most sectors reported negative returns this week due to broader weakness in the markets.”
“BSE Pharma index was the bright spot as it gave positive returns led by re-emergence of covid scare. Globally markets remained volatile as it reacted to reported rise in covid cases in China and strong US GDP data. Brent crude oil price continues to trade around the $80 per barrel mark whereas the US 10-year treasury yield saw some upward movement this week. Covid case count in China and concern about possible recession will continue to influence global equity market in the near term.” Chouhan added.
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