TEAM FINANCE I THE GOAN
Domestic equity markets ended in the red on September 11, extending their losing run to five consecutive weeks. The Nifty 50 fell 79.70 points, or 0.34 per cent, to close at 23,398.10. The 30-share Sensex declined 120.83 points, or 0.16 per cent, to finish at 74,781.76.
After five weeks of losses, investors are heading into an eventful week from September 14, with several domestic and global factors likely to influence market sentiment. Volatility could remain high as the trading week has been shortened by a market holiday.
Short trading week
The Bombay Stock Exchange and the National Stock Exchange will remain closed on Monday, September 14, for Ganesh Chaturthi. Trading will therefore take place only from Tuesday to Friday.
Short trading weeks can lead to higher volatility as traders and institutional investors have fewer sessions to adjust their portfolios and hedge positions. Developments in global markets on Monday could also influence the opening of Indian markets on Tuesday, leading to a sharp gap-up or gap-down opening.
BRICS summit impact
The BRICS Summit, being held in New Delhi on September 12 and 13, could influence market sentiment when trading resumes on September 15. Investors will watch for announcements on trade, energy security and supply-chain resilience.
Any new trade agreements or financing initiatives through the New Development Bank could be important for domestic markets. Progress between India and China on their trade deficit could also affect sectors such as manufacturing, capital goods and logistics.
Fed decision
The US Federal Open Market Committee (FOMC) will meet on September 15 and 16 to decide its monetary policy.
The Federal Reserve’s interest rate decision and economic projections could have a significant impact on Indian equities. A hawkish stance, with rates expected to remain high for longer, could encourage investors to move money from emerging markets such as India into US Treasury bonds. This could increase selling pressure on Indian shares.
A dovish approach, suggesting the possibility of monetary easing, could instead improve investor sentiment towards equities.
Inflation data
Investors will also track India’s latest inflation figures. The Consumer Price Index (CPI) and Wholesale Price Index (WPI) data for August are due on September 14.
The figures will provide an indication of changes in consumer prices and manufacturing costs and could influence expectations about the Reserve Bank of India’s interest rate policy.
Higher-than-expected retail inflation could reduce hopes of domestic rate cuts. Elevated interest rates could also raise borrowing costs for highly leveraged companies and put pressure on their profit margins.
Advance tax watch
September 15 is the deadline for the second instalment of corporate advance tax payments. Large tax payments can temporarily reduce liquidity in the banking system.
The advance tax figures can also offer clues about corporate earnings expectations. Strong tax payments could suggest that companies are expecting healthy profits, supporting market sentiment. Weak collections, however, could raise concerns about a possible slowdown in corporate profitability.
