New Delhi: Stocks lost nerve and ended last week on a negative note, in line with weak global cues, as the US Fed signalled its intent to go for a rate hike as early as next month.

The BSE Sensex closed down 79 points, or 0.22 per cent, at 35,158 while NSEs Nifty dropped 13 points, or 0.12 per cent, at 10,585 on Friday.

A warning by Moodys Investors Service that Indian economy will expand 7.4 per cent in 2018, but will slow to 7.3 per cent next year due to rising interest rates kept sentiment fragile.

What is in store for Dalal Street in the upcoming week? Here we go.

1. Oil in bear market

That's a key factor to watch out for. Benchmark Brent crude on Friday fell below $70, down more than 18 per cent from four-year highs at the start of October. It fell 95 cents to a low of $69.70, down 4 percent for the week. Thus, Oil tumbled to multi-month lows as worldwide supply expanded and investors worried about the ongoing trade wars impact on fuel demand. A continued depreciation in oil would be a positive sign for the rupee and the domestic market.

2. Eyes on IIP data

IIP for September that tracks growth of different sectors of the economy will be out on Monday. Indias industrial output slowed down to a 3-month low of 4.3 per cent in August 2018, offsetting the 6.5 per cent gain in July. According to SMC Global Securities, the rupee might get further support from CPI numbers, which are set to come in next week. However, the rupee gain may be limited owing to the resurfacing of the rumours about continuance of the RBI governor.

3. Inflation in focus too

Retail inflation for October is lined up for Monday as well. Indias retail inflation inched up to 3.77 per cent in September, recovering from a 10-month low of 3.69 per cent in August. The market will also be looking forward to the release of wholesale price index (WPI) inflation data for October on Wednesday. WPI inflation surged to 5.13 per cent in September overshadowing the 4.53 per cent low in August. Furthermore, the Street would be interested in Indias trade balance numbers, which will be out on Thursday. September trade deficit, which stood at USD 13.9 billion, came as a pleasant surprise, way better than the previous two months.

4. Forex fluctuations

The appreciating rupee has been a positive sign for the domestic market. The rupee gained 50 paise to 72.5 against the greenback on Friday, riding on the back of falling crude oil prices and increased selling of the US dollar. Investors are tracking the forex development with keen interest. Anindya Banerjee, Currency Analyst, Kotak Securities, said: “Lower oil prices will ensure the rupee remains stable against the dollar. However, gains can be limited as a hawkish Fed will ensure dollar-rupee trades within a range of 72.30-73.20 on spot.”

5. Q2 earnings to track

The earnings season so far has been fairly mixed. While some companies like SBI, Voltas, PNB housing Fin saw decent Q2 profit, others such as MRF, Indian Bank, Century plyboards reported losses. Britannia, Hathway, Tata Steel, Hindustan Motors, Jet Airways, Jindal Steel, Siemens, MMTC, Quickheal, Union Bank, Apollo Tyres, Bombay Dyeing, Glenmark, Hindustan Copper, Sun Pharma, Infibeam, JK Lakshmi, M&M, MTNL and PC Jeweller are among others that will announce their earnings next week.

6. Modi-Pence meet stirs interest

Market participants will also be tracking the meeting of Prime Minister Narendra Modi and US Vice-President Mike Pence next week. The two leaders would discuss India-US defence cooperation and bilateral relationship during their meeting in Singapore next week. But whether or not they enter into any trade specific agreement remains a speculation. “Such diplomatic meets are only limited to bilateral ties and take place in a kind of a broader context. Therefore, they should not directly affect markets,” said Gaurav Dua, Head Research Sharekhan.

7. What do technical charts say?

The 50-pack Nifty index formed a hammer candle on daily chart on friday, suggesting buy at lower level. “The index needs to hold above 10,500 level to extend its upmove towards the 10,650 -10,750 range. Multiple supports are seen around 10,450 and 10,380 levels," said Chandan Taparia, Derivatives & Technical Analyst, Motilal Oswal Securities.

“At this juncture, we still believe that the index is heading towards its cluster of resistance, which is in the zone of 10,750-10,800… Since major action was seen outside the index and with the midcap index outperforming our benchmarks, we advise traders to continue with a stock centric approach by adopting a proper exit strategy,” said Angel Broking.

Original Article