Concerns over stagflation as well as macro-economic wholesale inflation data and global liquidity flows will determine the key equity market moves during the upcoming week, experts said.
Lately, macro-data points on inflation and industrial production spooked investors as they indicated that India’s economy has entered into a phase of Stagflation.
This trend is marked by simultaneously rising retail inflation and falling Gross Domestic Product.
Accordingly, concerns on stagflation and anxiety over the upcoming WPI Inflation level for November will keep investors on their toes.
Last week, retail inflation data for November pointed out that a massive rise in food prices lifted Consumer Price Index (CPI) reading to 5.54% from 4.62% in October.
Similarly, on a year-on-year (YoY) basis, the CPI last month was higher than the corresponding period of last year when retail inflation stood at 2.33 per cent.
The data assumes significance as the Reserve Bank of India (RBI) in its latest monetary policy review maintained the key lending rates on account of rising inflation levels.
Apart from inflation related data-points, investors will look forward to the minutes of the RBI’s latest monetary policy review meeting.
Similarly, the 38th GST Council meet is reportedly scheduled on December 18, 2019. This will catch investors’ attention.
However, Motilal Oswal Financial Services’ Retail Research Head Siddhartha Khemka pointed out that despite high valuations, positive global cues along with liquidity flows may help sustain the market momentum next week.
“The current market momentum can sustain next week as well, provided there is more clarity on the US China trade settlement,” Khemka said.
“Further, liquidity flows have been supportive which may continue for a while. Government on its part has also been supporting through a series of reforms.”
According to Edelweiss Professional Investor Research’s Chief Market Strategist Sahil Kapoor, the US Dollar weakness, revival in base metals, US China trade deal and improvement in some high frequency indicators suggested that stocks are likely to rally.
“NSE Mid-cap index appears ripe for a breakout and momentum based uptrend,” he said.
Besides, rupee’s movement against the US dollar will influence investors’ sentiments.
According to Sajal Gupta, Head Forex and Rates, Edelweiss Securities, last week rupee appreciated on the back of Essar Steel deal inflows and positive US-China trade pact commentory.
The Indian currency is expected to range from 70.50-71.20, next week from its previous close of 71.8150.
Additionally, technical charts showed that National Stock Exchange’s Nifty50 remains in an intermediate uptrend.
“Further upsides are likely once the immediate resistance of 12,159 is taken out. Crucial supports to watch for resumption of weakness are at 11,934,” HDFC Securities’ Retail Research Head Deepak Jasani said.