Global cues, rupee to chart course of equity indices (Market Outlook)

Mumbai : Fears over a rise in global protectionist measures, along with rupee movement and direction of foreign funds, are likely to chart the course of major domestic equity indices during the week starting on August 20.

"Global risk will drive the market sentiments next week. The news on US-China talks to resolve trade disputes later in the year will boost the sentiment," Devendra Nevgi, Delta Global Partners Founder and Principal Partner, told IANS.

"The news emanating from Jackson Hole Symposium, where the US Fed Chairman is expected to comment on the policy rates, will be watched next week," Nevgi added.

Consequently, investors will remain cautious over the possibility of any impending hike in the US interest rates which can potentially drive away Foreign Portfolio Investors (FPIs) from emerging markets such as India.

"Besides, rupee movement and crude oil price movements along with inflow and outflow by the foreign and domestic players will dictate the trend of the market going ahead," SMC Investments & Advisors' Chairman and Managing Director D.K. Aggarwal told IANS.

According to Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, the Indian rupee is expected to range from 69.50 to 70.50 against the US dollar in the coming week.

In recent days, geo-political tensions between the US and Turkey, wider trade deficit, along with outflow of foreign funds have pulled the Indian rupee to fresh record intra-day and closing lows.

On Thursday, the Indian rupee plunged to an intra-day level of 70.39-40 -- its lowest-ever mark -- against the greenback, prompting some automobile manufacturers and other import dependent sectors to raise prices.

It settled at a record closing low of 70.16 against the US dollar on Thursday.

Besides the rupee, foreign fund inflows into the country might get impacted due to "global risk aversion".

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 2,028.47 crore during August 13-16.

"Emerging market sentiment remains negative which is reflected in the net selling by FPI, and the DII support is vital for the continued momentum in the markets," Nevgi said.

On technical levels, the National Stock Exchange (NSE) Nifty50 remains in an uptrend.

"Technically, with the Nifty surging to new highs, its intermediate trend remains up," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"The intermediate uptrend is likely to continue once the immediate resistance of 11,495 points is taken out. Crucial supports to watch for resumption of weakness is at 11,340 points."

Last week, both key Indian equity indices -- S&P BSE Sensex and NSE Nifty 50 -- rose on the back of easing inflation data along with broadly positive global cues.

However, a slump in the Indian rupee limited the gains on equity indices.

On a weekly basis, the S&P BSE Sensex closed at 37,947.88 points, higher 78.65 points or 0.21 per cent from its previous week's close.

Similarly, the wider NSE Nifty50 made substantial gains. On Friday, it ended at a record closing high of 11,470.75 points, higher 41.25 points or 0.36 per cent from the previous week's close.

(Rohit Vaid can be contacted at rohit.v@ians.in)