From India’s macroeconomic data to US inflation: Factors that may drive Dalal Street this week

Last week, the Indian equity markets garnered around 2 per cent gains as traders remained hopeful of a pause in US interest rate hikes. This week traders will be eyeing lots of macro-economic data such as India’s Industrial Production, retail and wholesale price inflation, and balance of trade, along with inflation data and jobless Claims in the US, that will keep the markets buzzing.  

Economic events: On September 12, traders will keep an eye on the Index of Industrial Production (IIP) and Consumer Price Index (CPI) respectively. Retail price inflation in India jumped to 7.44 per cent in July 2023, the highest since April 2022, compared to an upwardly revised 4.87 per cent in June and market forecasts of 6.4 per cent.

The market will also be looking forward to the Wholesale Price Index (WPI) data, scheduled to be released on September 14. Foreign Exchange Reserves and Balance of Trade data going to be released on September 15.  

Market macros: Vinod Nair, Head of Research at Geojit Financial Services, said the domestic indices experienced a gradual rally throughout the past week, buoyed by strong domestic macroeconomic data such as robust GDP and PMI figures, which painted a positive outlook for the domestic market. “Despite a mixed global trend marked by weak cues, Indian equities remained resilient, supported by this strong economic outlook. Global concerns were sparked by a surge in crude oil prices, August's US jobless claims data, weak Chinese service PMI and trade figures, and rising gas prices due to strikes in Australia."  

He added, “However, in the broad market, mid- and small-cap stocks attracted strong buying interest, even though their valuations were relatively high. Moreover, heightened order inflows made sectors like infrastructure and realty particularly attractive to investors during the week. Currently, the market is eagerly awaiting data on inflation and industrial production to provide further guidance."

US market data: On the global front, investors would be eyeing important economic data from the world’s largest economy, the United States (US), starting with Consumer Inflation Expectations on September 11 followed by Redbook on September 12, Inflation Rate on September 13, Initial Jobless Claims, Producer Price Inflation, Retail Sales on September 14, Industrial Production, Manufacturing Production, Import and export prices, and Baker Hughes Oil Rig Count on September 15.

Technical Outlook for Nifty: Rupak De, Senior Technical analyst at LKP Securities, said the Nifty displayed strength, primarily driven by strong demand for large-cap stocks. De said: “The overall trend remained robust as the index consistently stayed above a critical moving average. However, a significant hurdle for the Nifty came in the form of substantial Call writing at the 19900-strike price. Looking ahead, only a decisive move above the 19,900 level has the potential to propel the index towards the 20,200 mark. On the flip side, there was substantial Put writing at the 19,700 level, providing strong support for the Nifty,"

Bank Nifty: Kunal Shah, Senior Technical and derivative analyst at LKP Securities, said the Bank Nifty index witnessed a strong bullish momentum as the bulls took full control. “Following the breakthrough of the resistance level at 44,650, there was a sharp rally of 600 points. The next significant hurdle on the upside is situated at 45,500, where the highest open interest is concentrated." The index maintains a "buy on dip" mode, with robust support seen at the 44,800 levels, underlining the bullish sentiment in the market, Shah said.

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