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Markets week ahead: These factors will move Sensex, Nifty. What should investors do

In the coming trading sessions this week, investors will be watching closely the results of the US Fed’s monetary policy and foreign money flows. Another aggressive rate hike is on the agenda from the Fed, which has shaken market sentiment in recent days. Last week, Indian equities corrected sharply on weak global signals amid recession fears over concerns about a slowdown in major economies. Important economic data further fueled the mood. Indian CPI inflation rose while the wholesale price index fell slightly in August. However, factory production slowed in July. At home, the market will also gauge RBI’s September policy, while the third-quarter FY23 season, which kicks off next month, may lead investors to bet on value stocks.

Last week, on Friday, Sensex closed down at 58,840.79 by 1,093.22 points or 1.82%. Nifty 50 ended at 17,530.85 and was down 346.55 points or 1.94%. Consumer durables, IT and auto stocks were the hardest hit. Tech giants faced heavy sell-offs amid fears of a global recession. The market capitalization of BSE-listed companies decreased by 6,18,536.3 crore in one day.

As of September 16, the market capitalization of BSE-listed companies is: 2,79,68,822.06 crores.

In the week of September 12-16, the markets got off to a great start with Sensex crossing the 60,600 level and Nifty 50 climbing above the 18,000 level. However, during the last three trading sessions, benchmarks have wiped out gains due to broad selling pressure. Sensex lost more than 1,274 points this week and Nifty 50 dropped above 405 points. Both benchmarks fell more than 2% each.

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Meanwhile, the rupee closed at 79.78 against the US dollar on Friday as a result of a strong greenback and the throwing of stocks in the domestic market. On September 16, Foreign Investors (FIIs) remained net sellers of Indian equities. These investors withdrew 3,260.05 crore on the day. FII’s outflow was up 1,270.68 crore on September 15 and 1,397.51 crore on Sept 14.

Vinod Nair, Head of Research at Geojit Financial Services, said: “Despite the strong decoupling scenario and encouraging macroeconomic data, domestic stock markets have succumbed to the global trend of rising bond yields and the dollar index amid fears of interest rate hikes in the global market. Fears of a recession in the global economy increased selling pressure in IT and pharma stocks While the domestic CPI of 7% points to a rising inflation trend due to higher food prices, core inflation of 5.9% and declining WPI offered Inflation Some Relief The 15.5% yoy rise in bank lending in August indicates that the economy is recovering rapidly.

What can you expect from the market in the coming week?

Apurva Sheth, Head of Market Perspectives, Samco Securities urges traders to exercise caution. He said: “Compared to its previous high of 17,992 on August 19, the Nifty 50 reached a higher high of 18,091 on September 14. However, the 14-day RSI has developed a lower high. This suggests that momentum is slowing. The Nifty may now face strong headwinds near its previous highs, the level of immediate support has been set at around 17,000 levels Before making strong long bets in the markets at this point, traders should be cautious. “

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Hemant Kanawala, Senior Executive Vice President & Head-Of Equity at Kotak Mahindra Life Insurance Company expects markets to consolidate in the near term.

He said: “As the benefit of the valuation revaluation is limited here, future performance and direction in the market will be determined by earnings upgrades and rollovers. While investors await clarity on the earnings upgrade and closely monitor demand prospects the markets may continue to consolidate in the near term.”

According to Sheth, next week’s FOMC meeting and press conference will be the center of attention. Globally, the Fed’s interest rate decision could cause jitters in the markets. Given the aggressive stance of the US Fed, some people even expect a rate hike of 100 bps. US markets have already faced deep austerity measures as they reacted to the aggregate CPI and core inflation figures for August’22. While India has significantly outperformed all other major markets, it is expected to remain volatile.

According to Nair, mid and small caps are expected to continue their outperformance in the short to medium term as they trade fairly well compared to large caps and are discounted from their historical valuation trend. On the global front, after the release of US inflation data, which showed a rise in the MoM of inflation, the global market has priced in the likelihood of a more aggressive policy response from the Fed in its upcoming meeting.

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