TAt the close of market hours on Friday, the Sensex ended up 372.68 points, or 0.99 percent, at 38,090.64. The Nifty closed 145.30 points, or 1.28 percent, higher at 11,515.20. The market breadth was positive as 1,797 shares advanced against a decline of 834 shares, while 183 shares remained unchanged.
Week-on-week, the Sensex and Nifty ended lower by around a percent each. In the first half of last week, high crude prices and weak macros weighed on indices.
This week, investors will keep an eye on IRCON International's public offer, crude oil prices and rupee movement against the dollar. Market participants will also track fallout of a trade war between the US and China, which has managed to spook the market.
Here are 10 factors that will keep D-Street on its feet:
Outcome of PM Modi's economic review
The government on Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for foreign portfolio investors and curbs on non-essential imports to contain the widening current account deficit (CAD), which has widened to 2.4 percent of GDP in April-June, and check the rupee’s fall against the dollar.
The decisions were taken at a meeting chaired by Prime Minister Narendra Modi to review prevailing economic issues. These measures are likely to have a positive impact to the tune of $8-10 billion, a top Finance Ministry official said.
In addition, the government on Saturday reaffirmed its intent to walk the talk on fiscal discipline (to strictly maintain a 3.3 percent fiscal deficit target for FY19), amid heightened optimism that the economy is poised to move into a faster lane, but steered clear of committing any measures to contain fuel prices despite growing public pressure.
IRCON International IPO
The initial public offering of IRCON International will open for subscription on September 17 at the price band of Rs 470-475 per share. This would be the ninth company coming out with a public issue this fiscal. It would be the second company coming out with an IPO under the government's divestment programme.
The public issue comprises an offer for sale of 99,05,157 equity shares by The President of India, acting through the Ministry of Railways. A discount of Rs 10 per share on the offer price will be offered to retail investors and eligible employees.
IDBI Capital Markets & Securities, Axis Capital, SBI Capital Markets are the book running lead managers to the issue.
Rupee movement versus the dollar
Investors will keep an eye on the movement of the rupee versus the dollar this week. The depreciation in the currency has been one of the major factors that played on the market last week.
Multiple factors such as a sell-off in emerging market currencies, weaker trade and current account deficit data for July along with higher crude prices weighed on the currency. It fell to a record low of 72.92 per dollar last week.
In the last two trading sessions, talk of a possible government intervention to shore up the rupee, led to a recovery in the dollar-rupee. Traders believe that a short covering rally that was witnessed in the rupee could also be under question this week.
Crude prices
The street will keep a close watch on crude price movements. The commodity was threatening to touch $80 per barrel-mark over the course of last week.
Rising crude oil prices poses a concern for a nation like India, which relies heavily on imports to meet its fuel requirements. A rise in prices will increase India's energy bill, leading to a strain on fiscal deficit and other key financials.
A conundrum that India is facing pertains to Iran, a key supplier of oil to India. However, with the US imposing sanctions on Iran, which come into effect from November, India stares at a supply problem from Iran.
According to a Reuters report, India’s loadings from Iran for this month and next will drop to less than 12 million barrels each after purchases over April-August had been boosted in anticipation of reductions.he Nifty raced past 11,500 and ended the session above that mark. This is contrary to the negative moves that the market had in the first couple of days of the week.
Better consumer and wholesale inflation data added to the positive sentiment last week. In global news, the Turkish central bank hiked interest rates to 24 percent to boost the lira.
A combination of factors, along with possible short covering by traders propelled the market to crucial levels.
echnical factors
The Nifty saw sustained buying on Friday, extending its gains above the psychological 11,500-mark. The index formed a 'Hammer' pattern on weekly charts.
After a sharp weakness in the last couple of weeks, the upside bounce in the last two sessions could indicate possibility of a comeback for the bulls, as per smaller and a larger timeframe charts, analysts at HDFC Securities said in a report.
“A decisive sustainable move above 11,605 levels this week could confirm further upside in the market, which could result in fresh highs for the Nifty in the next few weeks. Failure to sustain above 11,600 levels is likely to trigger weakness from the highs. In such a circumstance, the market could revisit the recent swing low of 11,250 levels, over the next few weeks,” the report added.
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