Sensex, Nifty this week: From bank loan growth to US Fed rate, factors that may drive Dalal Street

Last week, key equity benchmarks witnessed a powerful performance as Nifty and Sensex garnered around two per cent of gains and settled at their all-time high closing levels amid ease in retail inflation and a rise in industrial output. This week, investors will be eyeing macro-economic events such as India’s bank loan and deposit growth, forex reserve data, and a special session of Parliament, along with the Fed interest rate decision in the US, that will keep the markets buzzing.

Economic events: In economic releases, traders will be eyeing the foreign exchange reserves data, slated to be released on September 22. India’s forex reserves increased to $598.900 billion on September 1 from $594.860 billion in the previous week. On the same day, bank loan growth and deposit growth data are going to be released. The value of loans in India increased 19.8 per cent year-on-year in the fortnight ending August 25. 

Meanwhile, the trend in investment by foreign institutional investors and the movement of the rupee against the dollar will also be closely watched by the market participants.

The government has called a special session of Parliament from September 18 to 22. On the first day of the special session, there will be a discussion on the subject, ‘Parliamentary Journey of 75 years starting from Samvidhan Sabha – Achievements, Experiences, Memories and Learnings’. The agenda indicates that the government could use the special session to finally shift to the new Parliament building.

Foreign Investment trends: Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “FPIs continue to be net sellers in September. As per NSDL data, till 15th September, FPIs sold equity for Rs 4768 crores. This figure includes bulk deals and investments through the primary market. In the cash market, FII selling was Rs 9579 crores. Since the market is at record highs and valuations are high, FIIs are likely to press sales in the coming days. With high bond yields in the US (the 10-year is at 4.28 per cent) and the dollar index above 105, FIIs are likely to sell more.”  

He added that even though the FIIs have been sellers in the cash market it didn’t impact the market at all since it was neutralised by DII buying of Rs 8309 crores through 15th September. Hyperactivity by retail investors is also contributing to the bullishness in the market. “The ongoing market rally has taken the Nifty to rich valuations. At the current level, Nifty is trading at above 20 times the estimated FY earnings. The valuations in the mid- and small-cap space are becoming excessive. Investors have to be cautious”, Vijayakumar said.

US market data: On the global front, investors would be eyeing economic data from the world’s largest economy, the United States (US), starting with net long-term TIC Flows, Building Permits, Redbook on September 19, followed by Fed Interest Rate Decision, FOMC Economic Projections on September 20, Fed Press Conference, Initial Jobless Claims, and Existing Home Sales on September 21, S&P Global Manufacturing PMI Flash, S&P Global Services PMI Flash, and Baker Hughes Total Rig Count on September 22.

Technical Outlook for Nifty: Rupak De, Senior Technical analyst at LKP Securities, said “The Nifty continued to exhibit strength as the index reached new highs. Strong Put writing at 20,100 has further bolstered positive sentiment in the market. The trend is expected to remain positive as long as the Nifty remains above the 20,000 mark. In the short term, there is potential for the Nifty to move towards the 20,480-20,500 range on the upside.”

Bank Nifty: The sentiment remains positive as the Bank Nifty approaches its all-time high. “The strong presence of Put writers at 46,000 has supported the index to stay in positive territory. The trend is anticipated to stay bullish as long as the Bank Nifty remains above the 46,000 mark. In the short term, there is potential for the Bank Nifty to reach levels around 46,700 and 47,000 on the upside,” De said.

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