Dalal Street Week Ahead: Jackson Hole Symposium, FOMC minutes, PMI flash among 10 key factors to watch next week

Dalal Street Week Ahead

The market sentiment revived in the week ended August 16 as the benchmark indices snapped a two-week losing streak due to a smart bounce back on Friday. The positive global cues with the easing US recessionary concerns, rising hope for a US fed funds rate cut in September, and stability in the Japanese yen lifted sentiment.

In the week ahead, the market may see some consolidation with a positive bias, with focus on the FOMC minutes, the Fed chair speech in Jackson Hole, and global trends, according to experts.

The BSE Sensex rallied 0.92 percent to 80,437 and the Nifty 50 climbed 0.71 percent to 24,541 during the week, while the Nifty Midcap 100 index was up 0.84 percent and Smallcap 100 index gained 0.14 percent.

"All eyes next week will be on US Fed meeting minutes. Overall, we expect the market to consolidate in a broader range and take cues from global factors," Siddhartha Khemka, Head - Retail Research at Motilal Oswal Financial Services said.

According to Santosh Meena, Head of Research at Swastika Investmart, the uncertain geopolitical situation remains the primary near-term risk for the market. Traders will also closely monitor institutional flows and crude oil price movements, he said.

Here are 10 key factors to watch next week:

FOMC Minutes, Jackson Hole Symposium

Next week, all eyes will be on the FOMC minutes and speech by the US Fed Chair Jerome Powell at the three-day Jackson Hole Economic Symposium hosted by the Kansas City branch of the Federal Reserve on August 23. The global central bankers attending the annual gathering will watch Powell's speech keenly to learn about the Fed's monetary policy outlook and updated assessment of the US economic growth. Further, the event is taking place ahead of the September policy meeting where the Fed is widely expected to start the rate cut cycle.

Most experts see the 25 bps cut in the Fed funds rate in September but some economists also see the possibility of a 50 bps cut given the falling inflation and signs of weakness in the labour market.

In the last meeting in July, the policymakers saw the inflation moving towards their 2 percent target, but still at elevated levels. They want to be confident enough about the inflation consistently moving towards the 2 percent target before starting the rate cut. Furthermore, Powell said a September cut could be on the table if inflation moves down in line with expectations. In July, the CPI inflation on a 12-month basis dropped to 2.9 percent, the lowest since March 2021, from 3 percent in June.

Global Economic Data

Apart from FOMC minutes and Powell's speech, the weekly jobs data and new home sales data from the US; and inflation print for July from Europe and Japan will also be watched next week. In addition, the participants will also watch the manufacturing and services PMI flash numbers for August from several key economies.

Domestic Economic Data

On the domestic front, the focus will be on the HSBC Manufacturing & Services PMI flash data for August scheduled on August 22. The Manufacturing PMI for July came in at 58.1, down from 58.3 in the previous month, while Services PMI in July was at 60.3, falling from 60.5 in June.

In addition, the bank loan and deposit growth for the fortnight ended August 9, as well as foreign exchange reserves for the week ended August 16 will be released on August 23.

FII & DII Flow

The market participants will also keep an eye on the FII as well as DII desks, as foreign institutional investors remained net sellers in the cash segment of Indian equity markets but that outflow has fully been compensated by inflow from the domestic institutional investors who showing consistent buying interest on every dip given the no major negative on the domestic front.

FIIs have net sold Rs 8,616 crore worth of shares in the week gone by, taking the total current month's outflow to Rs 28,977 crore, however, DIIs bought Rs 10,560 crore for the week and Rs 34,060 crore for August month. "This (FII selling) trend is likely to continue since India is the most expensive market in the world now and it is rational for FPIs to sell here and move the money to cheaper markets. This picture doesn’t change even if the market turns more bullish on fears regarding US recession receding," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.

IPO

On the primary market front, a total of seven IPOs are going to hit Dalal Street next week including two from the mainboard segment. The Interarch Building Products' Rs 600-crore IPO will open for subscription on August 19, and the Rs 215-crore maiden public issue of Orient Technologies on August 21.

The SME segment will remain busy as five IPOs will be launched in the coming week, with Brace Port Logistics, and Forcas Studio opening on August 19. The initial public offerings of QVC Exports and Ideal Technoplast Industries will open on August 21, while Resourceful Automobile will hit the street on August 22.

Listings

In the mainboard segment Saraswati Saree Depot will debut on the BSE and NSE on August 20. Sunlite Recycling Industries and Positron Energy from the SME segment will list their equity shares on August 20, while the trading in Solve Plastic Products, and Broach Lifecare Hospital shares will commence effective August 21.

Technical View

Technically, the Nifty 50 is looking strong given the index turned back into momentum after several days of consolidation. With Friday's strong rally, the index climbed above all key moving averages and 50 percent Fibonacci retracement (taken from the record high to the August low). Further, it formed a bullish candlestick pattern with a long lower shadow on the daily as well as weekly charts, which is a bullish sign, while there was higher high-higher low formation on the weekly as well as daily timeframes. Hence, the index seems to be targetting 24,700 as climbing above this level can close the bearish gap of August 5 and drive the index towards the psychological 25,000 mark, however, on the downside, the support lies at 24,300-24,200, according to experts.

F&O Cues

The weekly options data indicated that 24,800-25,000 is the key hurdle zone for the Nifty 50 on the higher side, however, 24,400-24,300 is expected to be the support zone.

The maximum Call open interest was observed at the 25,000 strikes, followed by the 24,900 and 24,800 strikes, with maximum Call writing at the 25,000 strikes, and then the 24,900 and 24,800 strikes. On the Put side, the 24,500 strike holds the maximum open interest, followed by the 24,000 and 24,400 strikes, with maximum writing at the 24,500 strikes, and then the 24,400 and 24,300 strikes.

India VIX

The volatility dropped below the 15 mark as well as all key moving averages, which gave enough comfort for bulls to back the market. As long as it stays below this level, the trend may remain favourable for bulls. The India VIX, the fear index, snapped a two-day winning streak, falling 6.08 percent to 14.4, from 15.34 levels during the week.

Corporate Action

Here are key corporate actions taking place next week:

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