Bull versus bearish: After the rout of the American markets, the Indian stock market fell sharply on Friday. According to stock market experts, extremely fragile due to entrenched inflation and the possibility of severe measures by central banks to tame it, other factors such as geopolitical tensions, the risk of stagflation and the slowing global economic growth spooked Indian investors and this led to a sharp drop in Sensex and Nifty.
Speaking on the reasons for the fall in the Indian stock market, Sunil Nyati, MD at Swastika Investmart Ltd., said, “The sudden hike in the repo rate and CRR by the RBI has puzzled investors and this marks the end of the pandemic-led stimulus, we believe investors should work extra hard to earn good returns as the days of easy money come to an end. We suggest investors stick with quality names and invest in stocks that have good growth prospects and are reasonably valued and benefit from the current correction.
Thus, it becomes important for market traders and investors to stay alert on the factors that can work as major triggers for Dalal Street. Here we list the top 5 factors that will dictate the stock market next week:
1]4th quarter results: “We are in the middle of the earnings season. Many companies including Asian Paint, MRF, PVR, etc. will release their results next week, which will decide the fate of many sectors,” said Sonam Srivastava, Founder from Wright Research. .
2]Inflation and bond yields: The RBI reported a further rise in inflation. Commodity prices are already very volatile and food prices are also rising. Bond yields are also rising, signaling problems for highly leveraged companies with little cash. The direction of Indian inflation and consumer sentiment could be a key factor for the market next week.
3]Global Cues: With the dollar index rising to its highest level in 20 years and continued near-term demand for dollars, FIIs are expected to remain ‘net sellers’. It would therefore be important to keep an eye on the movement of the dollar. Global sentiment, inflation rates and bond yields will be key drivers for the market next week. The Fed’s rate hike sliced markets lower, and further narratives on how the European and US economies and markets will react will be critical for sentiment in India and FII flows.
4]FII business model: “Demand for US dollars is expected to continue and the dollar index could reach levels of 105-107 in the short term. of pressure in the Indian stock market,” said Anuj Gupta, VP Research at IIFL Securities.
5]Price of raw materials: Many market watchers expect commodity prices, particularly the price of crude oil, to ease soon after last month’s wild volatility in light of the Ukraine crisis. The direction of commodity prices will decide the future of many sectors in the metals, energy and consumer sectors.
Warning: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.