NEW DELHI: Yearend blues, a holiday-truncated expiry week, shutdown in the US government and rumours about US President Donald Trumps bid to throw out the Fed Chair threaten to deny Dalal Street any excitement in the final week of the year.
Cues from the US, rupee movement and domestic developments steered Dalal Street all through the week gone by.
A rout in the US stocks over worries of economic slowdown and Fed tightening extended to the Indian market, making domestic stocks fall like a pack of cards on Friday. Sensex fell nearly two per cent during the session as the broader market wiped out Rs 2.26 lakh crore worth of equity investors wealth.
Sensex lost 221 points, or 0.61 per cent, during the week, and Nifty 51 points, or 0.48 per cent.
Heres a look at the factors that are likely to sway market during the coming week:
The domestic stock market may tread choppy waters next week as the December series futures & options contracts expire on Thursday and investors roll over positions to the January series. Nifty futures closed in the negative at 10,769 with a loss of 1.91 per cent on Friday. On the options front, maximum Put OI was at 10,000 followed by 10,700, while maximum Call OI was at 11,000 followed by 10,900. The option band pegged Niftys trading range between 10,650 and 10,929.
Global cues may continue to dominate the market. A mayhem in US stocks has affected almost all major markets. Reports of the US President contemplating to fire the Fed Chair is an ominous sign at a time when the economy appears to be holding its breath.
Government's next move
During the last few days, the central government has taken some major policy decisions, including the liquidity infusion in PSU banks and GST rate cuts on 22 items, which have macroeconomic significance. What comes next from the government is anyone's guess, but any populist decision that can hurt the economy may roil the mood of the market. Experts say any move for farm loan waiver may cause a lending freeze for the agriculture sector in the coming quarter due to a hike in bank NPAs and disruption in the repayment cycle.
Lower demand and oversupply conditions dragged crude oil prices down about 11 per cent last week. Prices fell to their lowest since the third quarter of 2017 on Friday, slipping nearly 11 per cent in a week, as global oversupply kept buyers away ahead of the yearend holidays. The drop in crude oil prices is a boon for the Indian economy, as it reduces current account deficit and gives strength to the domestic currency. Sustained weakness in crude oil may draw FIIs towards Indian market.
Though there is no major domestic macro data slated for release this week, US new home sales data and pending home sales data for November, Japan unemployment data for November, Bank of Japan core CPI data and minutes of monetary policy meeting would be important global macro triggers that market will be watching during the week.
Technical analysts say Nifty is unlikely see any significant upward move from current levels. While the weekly trend on the index is looking upward, daily & monthly trends continue to be negative. Among Nifty50 stocks, the weightage is divided equally among positives and negatives, said Vaishali Parekh, senior technical analyst at Prabhudas Lilladher. "The key support for the week is seen at 35,100/10,550 levels, while resistance is seen at 36,300/10,930. Nifty has a strong hurdle at 10,950 and only a decisive break would bring it to higher levels," Parekh said.