scorecardresearch
Auto sales, manufacturing PMI data among key factors that will affect Dalal Street this week

Auto sales, manufacturing PMI data among key factors that will affect Dalal Street this week

In economic releases, traders will focus on S&P Global India Manufacturing PMI data for December to be released on January 2

In economic releases, traders will focus on S&P Global India Manufacturing PMI data for December to be released on January 2 In economic releases, traders will focus on S&P Global India Manufacturing PMI data for December to be released on January 2

The first week of 2023 will witness a series of economic data, which will decide the direction of the market. Investors will also track the release of monthly auto sales data. In economic releases, traders will focus on S&P Global India Manufacturing PMI data for December to be released on January 2. The S&P Global India Manufacturing PMI rose to a three-month high of 55.7 in November 2022 from 55.3 in the prior month. On January 4, S&P Global India Services PMI for December will be announced. The S&P Global India Services PMI was up to 56.4 in November 2022 from 55.1 in October. On January 6, the foreign exchange reserves data will be announced. 

Market watcher Deepak Jasani, Head of Retail Research at HDFC Securities said, "US equities closed 2022 in the red and all three major indexes registered solid losses on a yearly basis. The stock market posted its worst yearly decline since 2008. The three indexes were noticeably lower for the year, ending a three-year winning streak, as the DJIA tumbled 8.8%, the S&P 500 dropped 19.4%, and the Nasdaq Composite plummeted 33.1%.”

“US crude oil futures registered a second straight annual gain after a wildly volatile year marked by tight supplies due to the Ukraine war and then sliding demand from China, the world's top crude importer. Gold prices jumped to their highest level in six months on Tuesday and closed around those levels for the week as optimism surrounding decisions by top consumer China to further ease COVID-19 restrictions weighed on the dollar, while benchmark U.S. futures yields limited gains. Nifty formed an engulfing bear pattern on monthly charts. In the past such formations have led to fall of 5-18% over the next few months. US markets will be closed Monday in observance of the New Year’s Day holiday, which falls on Sunday. January month in India historically sees a rise which is getting sold off later in the month”. Jasani added.

In the US, traders will be eyeing the S&P Global Manufacturing PMI on January 3, followed by Redbook and ISM Manufacturing PMI on January 4, FOMC Minutes, API Crude Oil Stock, Balance of Trade data, Initial Jobless Claims, S&P Global Services PMI on January 5, Non-Farm Payrolls, Unemployment Rate, Factory Orders data and Total Vehicle Sales on January 6. The US markets will remain closed on January 2, 2023 on account of New Year's Day.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “As per NSDL data, FPIs have bought equity for Rs 6254 crore through the exchange up to 30th December. The total FPI sell figure through the exchange for CY 2022 is Rs 146048 crores. But FPIs have invested Rs 24608 crores through the primary market in 2023. This takes the net capital outflows to Rs 121439 crores. (All are NSDL data).”

“The main trigger for the FPI net selling in 2022 is the rising interest rates in US and INR depreciation. Now it appears that the dollar has bottomed out. The dollar index is now below 104 from its recent peak of 114. If this trend sustains. FPIs are likely to turn buyers in India in 2023.” he added.

Market veteran Dhiraj Relli, MD & CEO of HDFC Securities said, “Indian markets outperformed most other markets in 2022 benefitting out of better management of macros including inflation management and corporate earnings that did not disappoint majorly despite challenging times. This meant that India got a larger than proportionate share of FPI funds directed towards emerging markets.  Rising trade/fiscal deficit and pressure on Rupee were viewed negatively."

Outlook for 2023

As we enter 2023, India could continue to benefit out of high investment to GDP ratio (at 33% in FY23 versus 30.5% in FY21), higher infra, railway, road and defence spend by government; continued revival in real estate sector, PLI driven investments and supply chains are being consciously decoupled as national security concerns outdo economic efficiency. On the other hand, worries for India include core inflation remaining entrenched at 6% YoY with most items witnessing no let-up in momentum, pressure on fiscal deficit due to MNREGA spend & subsidies, high Current Account Deficit (4.4% in Sept 2022 quarter – a 9 year high).

"Fiscal deficit in India (Centre and Total) is not likely to come back soon to prudent levels after the Covid breach. Emerging markets are likely to benefit from a relatively more benign world vs. 2022. However India’s trailing outperformance could take a breather in H1CY23, given relative valuations. That said, India is likely to have better growth than most parts of EM due to a relatively strong macro environment. A range of policy reforms implemented over recent years set the base, while further policy action has empowered people and boosted financial savings, directing flows into equities,” said Relli.  

Also Read: Sensex, Nifty kick off 2023 on positive note; Tata Steel, Tata Motors rally up to 3%

Also Read: BF Investment shares soar 20% as board to consider voluntary delisting on January 4

Published on: Jan 02, 2023, 10:22 AM IST
Posted by: Priya Raghuvanshi, Jan 02, 2023, 10:19 AM IST
IN THIS STORY