Market week ahead: RBI policy meet, Gujarat polls among key events to track
Concerns over growing fiscal deficit and liquidity worries weighed on investor sentiment.
After rallying for eight sessions, the domestic equity market skidded badly during the week gone by, which saw the bears emerge triumphant and take the centrestage with elan.
And, thus the above saying by legendary investor John Templeton appears so apt here.
All the euphoria around Moody’s rating upgrade and a jump in the ease of doing business ranking evaporated as the market came to terms with real fundamentals.
Concerns over growing fiscal deficit and liquidity worries weighed on investor sentiment, which triggered the big selloff in the market. On Friday, the S&P BSE Sensex slumped 316 points to settle at 32,833 while the broader Nifty50 of National Stock Exchange (NSE) nosedived over 100 points to settle the session at 10,122, much below its crucial psychological level of 10, 200.
Here's a look at the top events for the coming week which may decide market direction:
RBI policy meet
The Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) is scheduled to meet on December 5, 2017 (Tuesday) and December 6, 2017 (Wednesday) for the fifth bi-monthly monetary policy meet of the FY17-18. The central bank is widely expected to keep the rates unchanged this time. However, global investment banks such as Goldman Sachs and Morgan Stanley expect the bank to start raising key policy rates from next year for the first time in four years as economic growth may pick up and also inflation would rise on account of higher crude and commodity prices. India's economic growth in the second quarter (July-September) of current fiscal rose to 6.3 per cent compared to 5.7 per cent in the first quarter (April-June).
Tech charts show upside is capped
The Nifty50 index on Friday dropped for the fourth consecutive session to end the week on a poor note. It made a Solid Bear candle, both on daily and weekly charts. The index first broke below the 10,240 level on Thursday and, on Friday, the 10,178 level. “Ideally one should make use of any rally to exit long positions as upsides are clearly capped. The market might have registered a multi-week top either at 10,410 or at 10,490 registered on November 6," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said.
Infosys to be watched keenly
The IT behemoth on Saturday announced Salil Parekh as Chief Executive Officer and Managing Director effective January 2, 2018, putting an end to an executive search that lasted for nearly two months. The company has been the cynosure of corporate and media world across the globe since abrupt exit of Vishal Sikka as CEO, following a heated tussle between him and Infy co-founder NR Narayana Murthy. The deveopment is likely to have an impact on the stock when trading resumes on Monday.
Shalby IPO on Dec 5
Ahmedabad-based multi-specialty hospital chain Shalby will launch its Rs 504 crore IPO on December 5. The offer comprises a fresh issue of equity shares aggregating up to Rs 480 crore and an offer for sale of up to 10,00,000 equity shares by the selling shareholder. The company has fixed the price band between Rs 245 to Rs 248 per equity share for its proposed initial public offer. The IPO will close on December 7.
The much-hyped and the biggest political development of the year will see the light of the day next week as Gujarat goes into first phase of elections. A lot is at stake for PM Narendra Modi and his party BJP as the outcome of the poll will serve as a major catalyst for 2019 Lok Sabha elections. Although the results will be declared on December 18, 2017, investors are expected to adopt a cautious stance, refraining from foraying into long-term bets.
DLF, Tata Steel key stocks to watch
The board of DLF has approved a plan to raise Rs 11,250 crore through issue of debentures and share warrants to promoters, which will go into paring its debt. The real estate developer will also offer 17.30 crore shares through either a public issue or private placement, the company said in a regulatory filing on Friday.
In another news, steel giant Tata Steel will acquire 74 per cent stake in Bhubaneshwar Power from JL Power Ventures for Rs 255 crore to ramp up its captive source of power, said a PTI report. The acquisition provides an opportunity to Tata Steel to meet growing power demand, it added.
Consumer electricals firm Havells India on Friday announced that it had completed sale of remaining 20 per cent stake in its European lighting business to China's Feilo Acoustics for 34.5 million euros (about Rs 260 crore), thereby exiting global markets.
On the macro front, Markit Economics will unveil the result of a monthly survey on the performance of India's services sector in November 2017 on Tuesday, 5 December 2017. The services industry activity expanded at its fastest pace in four months in October. The Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 51.7 in October — its highest since June — from 50.7 in September.
Two big-ticket developments in the US, Senate's approval to the historic bill to overhaul the US tax code and national security adviser Michael Flynn pleading guilty to lying on Russia, cooperates with US probe are likely to have a significant impact on the US stocks, thus affecting global markets including India as well. This apart, crude prices will also play a major role in deciding market direction.