Sensex, Nifty this week: From crude oil prices to US macro data, factors likely to drive Dalal Street

Indian equity markets ended in green for the seventh consecutive week amid favourable global cues and better-than-expected growth in the October industrial production data. This week, investors will be eyeing key events such as India’s foreign exchange reserves, FPI flows and RBI monetary policy meeting (MPC) minutes, along with US' current account data, and GDP growth rate, which will keep the markets buzzing.

Economic data: In the coming week, market participants will be eyeing foreign exchange reserves data, scheduled to be released on December 22, for further cues. Forex reserves in India increased to $604.040 billion on December 1 from $597.940 billion in the previous week. Besides, traders will be looking for RBI Monetary Policy Meeting minutes, which will be releaesd on December 22. The Reserve Bank of India held its benchmark policy repo at 6.5 per cent for the fifth consecutive meeting in December 2023 to ensure inflation stays within the central bank's 2-6 per cent target range while supporting growth.

Crude prices: The US Energy Information Administration on Tuesday lowered its 2024 price forecast for the international benchmark Brent, despite a recently announced production output deal from OPEC+.

Brent prices will average $83 per barrel in 2024, the EIA forecasted in a monthly report, versus an estimate the administration published last month of $93 per barrel.

US market data: On the global front, investors would be eyeing a few economic data from the world’s largest economy, the United States (US), starting with the NAHB Housing Market Index on December 18 followed by current account, CB Consumer Confidence on December 20, GDP growth rate, initial jobless claims, on December 21, personal income, personal spending, and Building Permits Final on December 22.

Nifty Technical Outlook: Rupak De, Senior Technical analyst at LKP Securities said that the Nifty's upward momentum persists with the bulls maintaining control in the market. Achieving a new all-time high, the index has marked its seventh consecutive weekly gain. "The prevailing sentiment appears strongly in favour of the bulls, as indicated by the absence of any reversal signals on the technical charts. Resistance is observed at 21,500, while a potential further rally in the Nifty could occur upon breaching this level. Support is currently positioned at 21,300," De said.

Bank Nifty: Kunal Shah, Senior Technical & Derivative analyst at LKP Securities, said: "The Bank Nifty bulls maintain their robust momentum, pushing the index beyond the 48,000 level. The overall market sentiment remains bullish, supported by a strong base at 47,500. Any retracements towards this support level are seen as buying opportunities. The upside potential for the index is projected to reach 50,000, indicating continued optimism among market participants."

Foreign investment trend: Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said: "A major development in December, particularly after the state election results, is FPIs turning buyers. This trend has intensified after the Fed signalled the end of the tightening cycle and indicated possibly three rate cuts in 2024." This triggered a crash in US bond yields with the 10-year yield going below 4 per cent. FPIs heavily bought stocks in the banking and IT segments. FPI buying is likely to sustain, going forward.

He further said: “India is one of the top investment destinations of FPIs. There is a near consensus now in the global investing community that India has the best prospects among the emerging economies for sustained growth for many years to come”. This growth has the potential to create phenomenal wealth through the stock market."

FPIs are investing to benefit from this potential wealth creation. After the inclusion of India in the JPMorgan Emerging Market Bond Index, there is high enthusiasm to invest in Indian government bonds. Some institutions may have already started buying. Now that the US bond yields have corrected significantly, Indian bonds will attract more investment, Vijayakumar said.