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Fed meet, profit taking among key factors that will drive market next week

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Fed meet, profit taking among key factors that will drive market next week

NEW DELHI: India’s benchmark equity indices had a stellar week, adding to investor wealth, as they scaled fresh peaks though the bull run was hindered by profit booking towards the end.

Positive economic data and government reforms in telecom, banking and automobile sectors helped boost market sentiments. The banking sector, which has underperformed rill now, came into its own during the week.

Investors across the world will be eyeing the Fed rate-setting meeting in the coming week for more clarity on the outlook for both tapering as well as interest rate revision timelines. While the Fed’s planned reduction of bond purchases has garnered much of the focus this year, its view on interest rates may give new clues that may move markets the world over, noted analysts.

Key factors that may guide markets next week:

US Fed meet: The US Federal Reserve’s FOMC will meet on September 21-22 to take decisions on its monetary policy. There is a possibility that the US Fed may talk about the timeline for tapering, which could be as early as November, and that may lead to cautious moves in the equity markets globally.

Other than the US Fed, the Bank of Japan will also come out with its monetary policy on September 22.

Covid vaccination: Vaccination has picked up pace in India with a total 80.37 crore doses delivered till now. Over 20 crore of India’s population is fully vaccinated now. India Inc will keep a watch on the pace going ahead. The earlier the country is fully vaccinated, the more it can open up its economy.

IPO: The primary market will also be abuzz with one listing and the bidding process starting for a new one. Automotive components manufacturer Sansera Engineering will make its debut on the bourses on September 24. Shares of Paras Defence and Space Technologies will be up for grabs during September 21-23. The price band for the Paras IPO has been fixed at Rs 165-175 per equity share.

FII flow: This is another area that investors will keep track of. Last week, FIIs bought equity shares worth a net of Rs 6,900 crore, data available with NSDL showed. They have been extra-bullish this month with net equity investment of Rs 11,287 crore. If the trend continues, the domestic equity market may hit fresh record highs

Nifty outlook: Nifty50 ended positive for the week gone by, but posted a reversal bar on the last trading session of the week. Similarly, Bank Nifty also posted a reversal bar after making a new high. In the short term, the market is trading overbought and may witness a small dip going forward due to profit booking.

“The overall positional outlook on the market remains bullish as long as it doesn’t cross the 17,500 level, because a break below the same will put a halt to the ongoing momentum. The immediate support and resistance for Nifty are now placed at 17,400 and 17,900 levels, respectively,” said analysts at Samco Research.

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