US inflation to dollar index: 5 factors that may impact stock market next week

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Stock market next week: The week gone by was yet another one which completely belonged to the bulls. In all five trading sessions last week, bears tried hard to make their presence felt on the Dalal Street but every time bulls managed to recover. As a result, the magnitude of the weekly rise was small but the direction remained positive.

“The Nifty 50 index surged over 1 per cent (1.39 per cent exact) and closed near 17,400 mark. The weekly line chart of Nifty has now confirmed a breakout from falling trend line and that indicates a possibility of further rise towards 17,600 to 17,800 mark. However, if we look at the daily chart then we can witness narrow range bodies in every trading sessions due to tug of war between the bulls and the bears. This suggests that either market is indecisive and taking a breather or there could be exhaustion.”

Here we list out top 5 triggers that may dictate stock market next week:

1] US inflation data: “The US Inflation data will govern the direction of global markets for the next few weeks. If the numbers are worse than expected, we could see volatility as the US FED will continue to be hawkish. On the opposite side, inflation eases in the US. We could see a confirmation that relief will come in the market’s second half,” said Sonam Srivastava, Founder at Wright Research.

2] Dollar index: “Dollar index has rebounded from its 105 support levels that is going to put pressure on the global equity markets. Fresh buying in the US dollar may erase the pressure created by the European Central Bank, Bank of England and other central banks on the US currency,” said Anuj Gupta, Vice President — Research at IIFL Securities.

3] US China Taiwan issue: “While the Ukraine-Russia conflict remains a significant cause of concern for the world, the new tensions between US-China-Taiwan have also caused worries for the market. Therefore, the progress in both geo-political crises will be a big trigger for the market,” said Sonam Srivastava of Wright Research.

4] FII buying: FII has surprisingly turned buyers in August, and many expect the FII sell-off to end and buying to start coming into the markets. Of course, FII buying will depend on US inflation and other global data, but the buying patterns of FIIs will be most important to watch.

5] US Fed speeches: “We have speeches from two key Fed officials lined up next week that will throw light on the monetary policy path ahead. Any hawkish hint from the Fed officials in this speech may trigger fresh buying in the US dollar leading to FII’s sell-off in the Indian equity markets,” said Anuj Gupta of IIFL Securities.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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