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Indian inflation data to fourth Covid wave — 5 triggers for market this week | Mint – Mint

Stock market this week: Following weak global cues, Indian stock market fell on 5 out of 6 previous sessions. After a streak of 3 weekly gains, Nifty 50 index ended lower last week by 2.31 per cent. Volumes on the NSE continued to be lower in line with the average of the past 3-4 sessions. World stocks hit a two-week low on Friday as rate hike guidance from the European Central Bank and jitters over upcoming US inflation data stoked concerns about global growth.

Fitch Ratings has revised up its outlook on India to stable from negative while affirming the BBB- rating. “The Outlook revision reflects our view that downside risks to medium-term growth have diminished due to India’s rapid economic recovery and easing financial sector weaknesses, despite near-term headwinds from the global commodity price shock,” Fitch said in a statement on June 10.

Nagaraj Shetti, Technical Research Analyst at HDFC Securities said, “A long negative candle was formed on the daily chart and that moved below the support of 16,200 levels. Now, the supports have started to break down one after another and the market seems to have picked up downside momentum on Friday.”

According to stock market experts, traders and investors are advised to remain vigilant about each and every trigger as market is yet to make its bottom and volatility in the equity market may continue this week as well.

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

1] Fourth Covid wave: Concerns of new Covid 19 cases have been increasing in India for last few days. Last week, there has been huge increase in new Covid cases in India as the figure stood at 36,267 on Friday 2022. In case of huge jump in number of new Covid cases in India, FIIs’ selling may scale up higher leading sharp sell-off on the Dalal Street,” said Jitendra Upadhyay, Sr. Equity Research Analyst at Bonanza Wealth Management.

2] Indian inflation data: Global markets will closely watch India’s inflation data, to be announced on Monday this week. “There are fears of stagflation in the global economy. Inflation targeting has been in the priority of the Federal banks worldwide. Equity and Debt Markets will closely watch commodity prices, inflation data and GDP growth projections from major economies,” said Divam Sharma, Founder at Green Portfolio — a SEBI registered portfolio management service provider.

3] US Fed meeting: “US wholesale inflation data and interest rate decision from Fed including speech from Fed Chair will have an impact on the markets and FPI activity. Markets are expecting a 50bps rise in interest rates in June,” Divam Sharma of Green Portfolio said.

4] Rupee vs dollar: “As the global risk off sentiment, geopolitical situation have added to concern of inflation, monetary policy tightening across globe. Foreign fund outflow has led to a weakening in the rupee and further intensified in the market. This has resulted in more than USD 20b of outflows from the Indian market since Oct’21 weighed on domestic currency,” said Jitendra Upadhyay of Bonanza Wealth Management.

5] Chinese and European industrial production data: Stock market investors and traders are advised to remain vigilant about the Chinese and European industrial production data expected next week. A disappointing number in this data may lead to boost speculations in regard to global economic slowdown.

“Tightening of interest rate has directed to short-term disruptions in the equity markets and spiked volatility. In addition, a slowdown in rural demand and rising inflation (led by crude and supply-chain disruptions) are near-term worries,” said Jitendra Upadhyay.

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

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