Stock Market Overview: Week Ending September 20
The stock market experienced a positive week ending September 20, reaching new heights as the US Federal Reserve announced a 50 basis points cut in policy rates. Initially, the market displayed signs of consolidation, but the late-week surge in buying from foreign institutional investors (FIIs) helped elevate market sentiment significantly. The Nifty50 saw an increase of 1.71%, closing at 25,791, while the BSE Sensex surged by 2% to reach 84,544.
Sector Performance
In the context of different market segments, the Nifty Midcap 100 index rose by 0.3%, indicating modest optimism among mid-cap stocks; however, the Smallcap 100 index fell by 0.9%, suggesting some challenges in the small-cap sector.
Key Factors Influencing Market Movement Ahead
As we move into the week starting September 23, several critical factors are expected to shape market movements:
1. Powell’s Speech and US GDP Data
Attention is heavily focused on the upcoming US GDP growth figures for the June 2024 quarter, set to be released alongside a speech by Federal Reserve Chairman Jerome Powell on September 26. Recent estimates indicate a growth rate of 3%, outperforming earlier projections of 2.8% and significantly higher than 1.4% in the March quarter. Market participants are particularly keen on Powell’s insights regarding potential interest rate cuts, economic growth, and labor market trends.
In addition to GDP data, investors will monitor various economic indicators such as Personal Consumption Expenditures (PCE) prices, real consumer spending for Q2-CY24, durable goods orders, as well as personal income and home sales data from August.
2. Global Economic Indicators
Globally, market eyes will be on early-week flash data for manufacturing and service Purchasing Managers’ Indices (PMIs), which are crucial for assessing the economic health of various countries.
3. Domestic Economic Data
On the domestic front, the HSBC manufacturing and service PMI flash numbers, scheduled for release on September 23, will be under scrutiny. Moreover, updates on foreign exchange reserves for the week ending September 20, set to be released on September 27, will provide additional insights into Indiaโs economic landscape.
4. FII and DII Flows
A notable rebound in foreign institutional investment took place following the Fed’s rate reduction, with FIIs purchasing shares worth Rs 14,064 crore on a singular day, marking the highest purchase activity in months. Conversely, domestic institutional investors (DIIs) exhibited a tendency for profit booking, offloading shares worth Rs 634 crore. With the US 10-year Treasury yield ending at 3.74%, a decline from the previous week’s 3.65%, market participants are keen to see how these trends evolve.
5. Oil Prices Surge
The week also saw a rise in oil prices, attributed to the Fed’s rate cut combined with escalating tensions in the Middle East. The international benchmark for Brent crude futures rose 4.02% over the week, closing at $74.49 per barrel. Analysts expect limited declines in crude prices due to geopolitical tensions impacting supply dynamics.
6. Upcoming IPO Activities
The stock market anticipates a bustling primary market in the week of September 23, with 11 new Initial Public Offerings (IPOs) scheduled to open. Investors will have opportunities to participate in five ongoing IPOs as well. Notably, shares from major companies such as Western Carriers (India), Arkade Developers, and Northern Arc Capital are set to be listed on the BSE and NSE on September 24.
Market Volatility Insights
Despite a slight uptick in stock market volatility last week, the index remains below key moving averages, which may present favorable conditions for bullish trends moving forward. The India VIX, a crucial volatility measure, increased by 1.91% week-on-week, culminating at 12.79, up from 12.55 in the previous week.
Corporate Actions on the Horizon
As the market gears up for a new week, expect notable corporate actions that could influence stock performance and investor strategies.
