Week ahead: All eyes on Fed meet, global cues

Nifty has been consolidating around the 17,800 zone for last few sessions after witnessing a sharp upmove of more than 800 points. Strong traction in ongoing domestic earnings, foreign institutional investors (FIIs) turning buyers and positive domestic cues can lead the Nifty to 18,000/18,200 levels over the next few days. However, volatility cannot be ruled out as domestic results announcement once again picks up pace after slowing down around Diwali. Further RBI emergency Monetary Policy Committee meet is scheduled on November 3 which would be cautiously awaited. Apart from these, Purchasing Managers’ Index (PMI) and fiscal deficit are some of the other economic data points that would be declared this week.

On the global front, while the US GDP growth of 2.6 per cent annualised was better than expected, weak results from tech heavyweight impacted sentiments. This week Federal Open Market Committee meet, Bank of England (BoE) interest rate decision along with US PMI data would also add to the market volatility. Overall we expect gradual momentum in market to continue with support base also shifting higher.

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This week, primary market too would be in action as four initial public offerings (IPOs) get launched to raise over Rs 4,500 crore. These companies are Bengaluru-based DCX Systems Ltd, cardiologist Dr Naresh Trehan-promoted Global Health Ltd, Bikaji Foods International Ltd and Fusion Micro Finance Ltd. Good listing gains in the recent IPOs have once again led to IPO rush with many more companies lined up in coming weeks.

Domestic equities ended the truncated festive week on a positive note with Nifty gaining 1.2 per cent. PSU Banks rallied more than 5 per cent on the back of good earnings report, though they witnessed some profit booking after RBI called for an additional meeting of its Monetary Policy Committee on November 3.

Auto stocks revived following strong festive sales and good results from Maruti. This week they would continue to be in action as monthly sales data get released for October which would include numbers for the Diwali festival.

Metals and realty sectors were in the forefront along with defence and public sector enterprises (PSEs) gaining traction. India VIX cooled off last week to below 16 levels and is supporting the overall positive sentiments in the market.

(The writer heads retail research at Motilal Oswal Financial Services Limited)