Market outlook: India's fiscal deficit to US GDP growth, factors that may drive Dalal Street this week

The Indian equity markets witnessed a significant fall in the last week amid global uncertainty. US Fed signaled to keep interest rates at an elevated level through 2024 after one more rate hike this year, despite the decision to hold interest rates steady this month. This week investors will be eyeing key data releases such as India's fiscal deficit, monthly F&O series expiry, forex reserve data, and current account data, along with the GDP Growth Rate in the US, that will keep the markets buzzing. 

Economic events

This week the stock market is likely to see some volatility with the scheduled F&O series expiry on September 28 and traders balancing their positions going ahead for the next series. On the economy front, traders will be eyeing India's fiscal deficit data, which is scheduled to be released on September 29. India's fiscal deficit increased to Rs 6.06 trillion in April-July 2023-24, compared to Rs 3.41 trillion in the same month of the previous fiscal year. On the same day, investors will be eyeing the data on India's Infrastructure Output, Foreign Exchange Reserves, and current account deficit. 

US market data

On the global front, investors would be eyeing economic data from the world’s largest economy, the United States (US), starting with the Chicago Fed National Activity Index and Dallas Fed Manufacturing Index on September 25 followed by CB Consumer Confidence, New Home Sales, Building Permits Final on September 26, Durable Goods Orders on September 27, Initial Jobless Claims, GDP Growth Rate, on September 28 and finally Personal Spending, Personal Income, Goods Trade Balance on September 29. 

The trend in global markets: Deepak Jasani, Head of Retail Research at HDFC Securities said “Global shares sagged and US yields climbed multi-year highs on Friday after a week packed with central bank meetings signaled that the U.S. Federal Reserve's interest rates would stay higher for longer”. The mounting risk of a U.S. government shutdown in just 10 days was also being watched by markets.

Bank of Japan (BOJ) on Friday stuck to an ultra-easy monetary policy and made no changes to its outlook. Equity funds globally had outflows of $16.9 billion in the week through Sept. 20, according to EPFR Global data. 

Technical Outlook

Jasani added, that Nifty fell on Sept 22 but showed signs of near-term bottom formation. On weekly charts, Nifty fell 2.57 per cent, the sharpest fall since the week ended Feb 20, 2023. A fall below 19645 could take the Nifty to the 19460-19480 band while on rises, the Nifty could face resistance at 19849 for the near term. 

Bank Nifty

Kunal Shah, Senior Technical & Derivative analyst at LKP Securities said “The BankNifty index witnessed a significant double top breakdown pattern, which often signals a reversal in trend. This bearish pattern was largely influenced by selling pressure in HDFC Bank”.  

The index breached its 20-day moving average (20DMA) located at 45,000. A break above this level could trigger some short-covering, but the overall sentiment remains bearish. The prevailing sentiment in the BankNifty index remains bearish. As a result, it's advisable to maintain a "sell on rise" approach. The next immediate support is seen in the 44,500-44,400 range, Shah said. 

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