Last week, Sensex and Nifty closed around 1% higher, boosted by positive US economic data that has lowered the likelihood of a recession in that country.
Market participants will be the first to react to the dovish remarks of the US Federal Reserve Chairman at the Jackson Hole Symposium. After a period of consolidation, US markets resumed their upward movement on Friday and look set to test record highs soon.
Listed below are the key factors that may influence Dalal Street during the week:
1) Hopes for rate cuts after Jackson Hole
Powell’s comments suggested a measured urgency, which has enthused investors, with markets currently pricing in a 60% chance of a 25 basis point rate cut in September and a 30% chance of a more aggressive 50 basis point cut, despite some lingering uncertainty, said Pravesh Gour of Swastika Investmart.
A potential rate cut by the Federal Reserve would likely improve market sentiment and push up stock prices.
2) FII/DII Action
Apparently concerned about the valuation gap in two parts of the market, foreign institutional investors (FIIs) have so far sold shares worth Rs 28,671 crore through the exchanges but have been net buyers of Rs 12,367 crore through the primary market so far in August.
3) RIL Annual General Meeting
India’s largest stock exchange conglomerate Reliance Industries (RIL) will hold its annual general meeting (AGM) on August 29 at 2 pm, where billionaire Mukesh Ambani will address shareholders. The Ambanis have a history of making key announcements at the AGM.
4) Macro data
The outlook for the market will be guided by key domestic and global economic data. India will release its July infrastructure output figures and second quarter GDP figures on August 30.
5) Technical aspects
The index continues to show strength, with the bullish structure intact. The momentum is expected to persist over the next week, with a possible break above 24,900 likely to propel the index towards 25,100 and 25,400 levels. On the downside, the 24,350 level will now serve as critical weekly support, said Palka Arora Chopra, Director, Master Capital Services.
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