scorecardresearch
Weekly market wrap: Market watchers, investors set their eyes on RBI interest rate meeting next week

Weekly market wrap: Market watchers, investors set their eyes on RBI interest rate meeting next week

This week key benchmarks tumbled again this week. The 30-share Sensex declined 1.26 per cent 58,098.92 on September 23 from 58,840.79 on September 16. Likewise, the 50-share Nifty index slipped 1.16 per cent to 17,327.35.

Market watchers believe that increase in policy rate by the US Fed and Bank of England coupled with escalation in geopolitical tensions between Russia and Ukraine further dampened market sentiments Market watchers believe that increase in policy rate by the US Fed and Bank of England coupled with escalation in geopolitical tensions between Russia and Ukraine further dampened market sentiments

It turned out to be yet another feeble week for the domestic equity market as benchmark equity indices BSE Sensex and NSE Nifty continue to decline for the second week. Market watchers believe that increase in the policy rate by the US Fed and Bank of England coupled with the escalation in geopolitical tensions between Russia and Ukraine further dampened market sentiments. Investors are worried about the expensive valuation of Indian equities and also efforts to stabilise the rupee, which induce rapid depletion of forex reserves. 

Also read: Harsha Engineers shares to list on September 26; here's what to expect


The coming week is also likely to have high volatility with the scheduled F&O series expiry on September 29 and traders balancing their positions going ahead for the next series. Besides, the six-member RBI Monetary Policy Committee is scheduled to meet during September 28-30, which is expected to announce its decision on the revision of interest rates on September 30. 
On the economic front, market participants will be eyeing the India Infrastructure Output and Consumer price index (CPI) data to be released on September 30. Traders will also keep an eye on shipping-related stocks as the Union commerce ministry is likely to release the new five-year foreign trade policy (FTP) on September 29. 

In the international market, investors would be eyeing a few economic data from the US, starting with New Home Sales on September 27 followed by Goods Trade Balance Adv on September 28, GDP Price Index, Initial Jobless Claims on September 29, and finally Chicago PMI, Baker Hughes Total Rig Count on September 30. 
Investment strategist Vinod Nair, Head of Research at Geojit Financial Services said: “The Fed's 75-bps rate hike was well anticipated, but the sustained aggressive stance indicating 125 bps hikes in the next two policy meetings by December 2022 has spooked the market. The Indian rupee fell to a new record low of 81 as FIIs are being sold. The extended hawkish monetary policy is bound to slow down the global growth engine. India is in a better position with a decoupled economy and with a pickup in credit growth and tax collection. However, a rise in geopolitical risk and the economic slowdown will affect India with a lag and weaken the performance in the short term.” 

Also read: Adani Wilmar vs Patanjali Foods: Which stock do analysts recommend?

Nair added, “Next week, investors will keenly watch the outcome of the RBI monetary policy on September 3. There is a consensus that a 50bps rate hike will help strengthen the domestic currency. Benign oil prices and strong local demand may help the RBI to maintain the balance between growth and inflation. We expect the market direction will be led by global developments and FIIs' action. On the valuation front, India is the most expensive stock market in the world today. Therefore, investors are advised to wait and watch until the dust settles." 
 
This week key benchmarks tumbled again, the 30-share Sensex declined 1.26 per cent 58,098.92 on September 23 from 58,840.79 on September 16. Likewise, the 50-share Nifty index slipped 1.16 per cent to 17,327.35. As many as 19 stocks in the Nifty index delivered a positive return to investors in the passing week. With a gain of 6.01 per cent, Sun Pharmaceutical Industries emerged as the top gainer in the index. It was followed by Hindustan Unilever (up 5.97 per cent), ITC (up 4.50 per cent), Britannia Industries (up 4.26 per cent), and Eicher Motors (up 3.75 per cent).  
 
Apollo Hospitals Enterprise, Bajaj Finance, Hero MotoCorp, Titan Company, and Cipla also advanced by over 2 per cent. On the other hand, Power Grid Corporation of India, Shree Cement and Ultratech Cement declined 14.03 per cent, 9.09 per cent and 5.17 per cent, respectively. Sector wise, the BSE Fast Moving Consumer Goods index gained 3.68 per cent during the week gone by. BSE Healthcare and BSE Auto indices have also given over 1 per cent returns. 
In contrast, the BSE Power index declined the most 5.10 per cent, while BSE Reality, BSE Capital Goods and BSE Banex index retreated 3.95 per cent 3.02 per cent, and 2.98 per cent, respectively. 

Also read: Rising interest rates may affect these 10 firms with high promoter pledging, debt to equity ratio

Market watcher Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said: “Domestic and international equity markets this week reacted to Federal Reserve’s 75 bps rate hike decision. The domestic market remained range bound and major indices gave broadly flattish returns this week. Returns of most sectoral indices this week were on slightly negative territory. However, BSE FMCG and BSE Healthcare witnessed some positive momentum. Global equity markets were under pressure post-Fed’s rate hike and its hawkish tone. The US 10-year treasury yield remained high and is now above 3.7 per cent. Globally, inflation, Central Bank rate increase action, energy prices, and recession will remain concern points. Crude oil prices have broadly remained stable but the Indian currency has depreciated in recent days. For the domestic market, one of the key events to watch out for is the upcoming RBI monetary policy.”

Published on: Sep 24, 2022, 2:37 PM IST
Posted by: Basudha Das, Sep 24, 2022, 2:27 PM IST