10 data points that will drive stock markets this week

The week starting 31st October and ending on 04th November is likely to be a data heavy week, both domestic and international. Here are some key data points to watch out for.

    a) The big data flow this week will be the US Fed meet that concludes with the Fed statement on 02nd November. If one goes by the CME Fedwatch, then a 75 bps rate hike looks to be on the cards and the markets have factored that in and prepared for the same. However, the real big takeaway will be the language of the Fed and the indications on the terminal rate of interest. That would be key to global markets.

    b) The second big event is a domestic even, which will be the special RBI MPC additional meet scheduled on 03rd November. The agenda of the special meeting is to discuss why the inflation has overshot the RBI targets so consistently. In fact, actual inflation has been above the median 4% inflation for 36 months in a row and also above the 6% outer limit for inflation for 3 quarters in a row. However, the RBI may also use the special meet to signal India’s hawkishness with another rate hike based on Fed language rather than waiting till the next meeting in December 2022.

    c) Of course, large cap results will hold the key to the week. These big companies expected to announce quarterly results in this week include Bharti Airtel, Larsen & Toubro, Tata Steel, Sun Pharma, Hero Moto, Titan, Cipla, State Bank of India and HDFC Ltd. This week will also see reaction to late week results of last week. This includes the positive results like Maruti and Reddy Labs as well as the relatively disappointing numbers for the quarter in case of IOCL and NTPC.

    d) The current week will see IPOs back in focus after a long time. A total of 4 IPOs will open in this week while 2 will close next week. There are more IPOs slated for the next week also. This week the focus will be on 4 IPOs of DCX Systems, Fusion Microfinance, Bikaji Foods and Global Health (Medanta). Of these, DCX Systems and Fusion Microfinance will also close in this week while Bikaji and Global Health will close next week. 

Also Read:

1. DCX Systems IPO GMP

2. Fusion Micro Finance IPO GMP 

3. Bikaji Foods International IPO GMP Updates

4. Global Health IPO GMP

    e) The focus will also be on 2 digital IPOs of the recent past that have been under pressure and lost 25% last week. We are talking about Delhivery Limited and Nykaa, both of which are now decisively below their issue price. This has rubbed off on most of the digital IPOs with spill over impact seen on players like Paytm and Policybazaar too.

    f) Oil and Rupee has reduced in volatility but will continue to be under observation. Brent crude oil has stabilized in the range of $93-96/bbl levels while the rupee has taken support around the 83/$ amidst RBI dollar selling support. This is expected to be another stable week for oil and rupee, with limited volatility likely

    g) FPI flows remained on the negative side but there is some positive support coming from the IPO segment. For October till date, FPIs net sold Rs1,586 crore in equities with a lot of reduction in the pressure coming from the IPO anchor flows. Combined with stead VIX at under 16 levels, this is likely to keep Nifty in a narrow range for the week. 

    h) Core sector data and PMI will be two key data points this week. PMI is likely to taper further to below the 55 mark on short term high frequency pressure on manufacturing growth. The same is likely for the core sector which grew at 3.3% last month and is expected to be flat to lower this month also. Core sector has strong externalities for IIP and for GDP growth too.

    i) A major data point to look at in the current week is the forex reserves. It has already fallen from $642 billion to $524 billion as of last Friday. It is expected to fall further this week as RBI continues to be actively intervening in the forex markets. The import cover of the forex chest is already down to just about 8 months and that is not a very comfortable situation to have, especially in terms of the currency value.

    j) Finally, let us look at some international data flows that are likely to impact markets this week. Apart from the Fed statement, other key US macro cues include the PMI, ISM, JOLTS data, exports, imports, jobless claims, factory orders and non-farm payrolls. For other markets, important cues include CPI, GDP ECB speak (for the EU region); IIP, retail sales, Monetary Policy Minutes (for Japan); PMI data (for China) and the HPI, PMI, Bank of England MPC vote (for the UK).
It is the combination of these factors that are likely to set the tone for the stock market direction in the current week.