Dalal Street Week Ahead: Manufacturing, services PMI, US economic data among 10 key factors to watch next week

Dalal Street Week Ahead

The benchmark indices as well as broader markets recorded fresh all-time closing highs in the week ended August 30, with the Nifty 50 finishing the week above the psychological 25,000 mark for the first time, backed majorly by IT stocks on hope of fed funds rate cut expectations from the September policy meeting, and renewed FIIs' buying interest. Despite major correction in the beginning, the August month, too, closed higher with over a percent gains, continuing uptrend for third consecutive month.

Moody's upgraded India’s GDP rating forecast (to 7.2 percent for 2024 and 6.6 percent for 2025 from earlier estimates of 6.8 percent and 6.4 percent, respectively), citing strong broad-based growth and healthy MSCI inflow, which also boosted market sentiment.

On Monday, the market will first react to Q1 GDP numbers announced last Friday and auto sales data from some companies over the weekend. Overall, according to experts, the sentiment may remain positive despite likely intermittent consolidation and fresh highs can't be ruled out next week, with a focus on the global macro data and PMI numbers.

During the last week, the BSE Sensex rallied 1.58 percent or 1,280 points to 82,366, and the Nifty 50 climbed 1.66 percent or 413 points to 25,236, while the Nifty Midcap 100 and Smallcap 100 indices gained 1.25 percent, and 1.19 percent, respectively.

"We expect the market to continue its northbound journey with stock-specific action," Siddhartha Khemka, Head - Research, Wealth Management at Motilal Oswal Financial Services said.

According to him, global macro data released during the week will continue to provide cues to domestic equities.

Here are 10 key factors to watch:

US Unemployment Rate

Globally investors will focus majorly on several economic data points from the US including the unemployment rate, non-farm payrolls, monthly vehicle sales for August; weekly jobs data; and JOLTs job openings & quits, and factory orders for July, which will influence the market sentiment. All these data will be important especially ahead of the Federal Reserve's September policy meeting, wherein as per most experts, the central bank may announce a first rate cut. In July, the unemployment rate jumped to 4.3 percent, from 4.1 percent in the previous month.

Global Economic Data

Apart from the US economic data, the manufacturing and services PMI numbers from several developed and developing nations, as well as the third estimates for Europe's June quarter GDP will be watched.

Domestic Economic Data

On the domestic front, the market participants will keep an eye on the final HSBC Manufacturing and Services PMI numbers for August, releasing on September 2, and September 4, respectively. As per the Flash data, Manufacturing PMI dropped to 57.9 in August, from 58.1 in the previous month, while Services PMI increased to 60.4, from 60.3 during the same period

In addition, bank loan & deposit growth for the fortnight ended August 23, and foreign exchange reserves for week ended August 30 will also be announced next week on September 6.

Auto Stocks

Auto stocks will be in focus in the initial part of the next week as automobile companies started releasing their August sales numbers from September 1.

FII & DII Flow

The activity at the FIIs and DIIs' desks is another factor to watch in the coming week. Finally, foreign institutional investors turned net buyers in the equity cash segment (as per provisional data) after being sellers in the previous several weeks, which may have provided good support to the market to hit fresh record highs, although domestic institutional investors preferred to book some profits at highs.

FIIs net bought Rs 9,217 crore worth of shares during the passing week, which resulted into a reduction in their net selling for August month to Rs 21,369 crore. DIIs remained buyers, pumping in Rs 1,198 crore in the week (although the inflow was low compared to previous weeks) and Rs 48,279 crore in August.

IPO

In the primary market, the mainboard segment will not see major action as Gala Precision Engineering is the only IPO from the segment, opening next week on September 2 to raise Rs 168 crore, while Premier Energies will be the first listing on the bourses next week on September 3, followed by Ecos India Mobility & Hospitality on September 4. In addition, Baazar Style Retail's 835-crore public issue will close on September 3 and the trading in its equity shares will commence effective 6.

Also read: Bajaj Housing Finance IPO to open between September 9-11; to raise Rs 6,560 crore

Meanwhile, there will be a busy schedule in the SME section. Jeyyam Global Foods will be the first IPO, opening for subscription on September 2, followed by Mach Conferences and Events, and Namo eWaste Management's IPOs on September 4. My Mudra Fincorp's maiden public issue will hit the street on September 5, while the public issue of Travels & Rentals will be closing on September 2, and Boss Packaging Solutions on September 3.

Further, Indian Phosphate, Vdeal System, and Jay Bee Laminations will be listed on the NSE Emerge on September 3, while the trading in Paramatrix Technologies, and Aeron Composite shares will commence on the NSE Emerge, effective September 4. Travels & Rentals will debut on the BSE SME on September 5, followed by Boss Packaging Solutions shares on the NSE Emerge on September 6.

Technical View

Technically, the Nifty 50 formed a Doji-like pattern on the daily charts, and on the weekly timeframe, the index recorded a long bullish candlestick pattern, with the continuation of higher highs-higher lows formation, and positive bias in momentum indicators. Hence, the upward journey is likely to continue with a focus on the 25,400-25,500 levels next week but the intermittent consolidation can't be ruled out with immediate support of 25,000, with 24,800 being crucial support, according to experts.

F&O Cues

The weekly options data indicated that the 25,700-25,800 are the next levels to watch on the higher side, with support at 25,000 in coming sessions.

On the Call side, the maximum open interest was seen at 26,000 strikes, followed by the 26,500 and 25,700 strikes, with maximum writing at the 25,800 strikes, and then the 26,500 and 25,700 strikes. On the Put site, the 25,000 strike holds the maximum open interest, followed by the 25,200 and 24,000 strikes, with the maximum writing at the 25,200 strikes, and then the 25,000 and 25,300 strikes.

India VIX

The volatility remained on the lower side for the third consecutive week and sustained below all key moving averages during the week, which is favourable for bulls to hold the fort. Until it stays below the 15 mark, the charge may remain at the bull's desk, experts feel. The India VIX, the fear index, dropped 1.18 percent to 13.39, from 13.55 levels on a week-on-week basis.

Corporate Action

Here are key corporate actions taking place next week:

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.