CPI, IIP numbers and Q2 earnings among 8 factors that will steer market this week

New Delhi: Domestic equity markets settled higher last week, extending their gains on the back of positive domestic cues and upbeat earnings, despite rate hikes from the US Federal Reserve and Bank of England.

Fueled by the buying in index heavyweights, Sensex and Nifty rose 2% each during the week. Indices gauged to the second rung counters rose in tandem with the headline peers.

On a sectoral basis, an 8% rise in metal counters put them in the spotlight. Pharma and PSU lenders were up by 3%, followed by decent action in capital goods, industrials, energy and oil & gas counters.

Ajit Mishra, VP - Research, Religare Broking, said that markets were gradually inching higher towards record highs; however, volatility on the global front is capping the momentum so far.

After a two-week pause, bank stocks look set to resume the uptrend. Since all sectors are contributing to the move, we recommend preferring the top performers from the respective sectors and accumulating them on dips," he added.

In the holiday-shortened week, with markets remaining shut on Tuesday, November 8, on account of Gurunanak Jayanti, factors including global worries, inflation, and domestic macroeconomic numbers, India Inc earnings are likely to guide the markets.

Here are eight factors that will direct the Indian domestic equity market in the upcoming week:

Inflation Concerns
The United States will announce its CPI numbers for October in the coming week, revealing the situation of inflationary pressure. This will also suggest cues about the next rate hike by the US Fed amid recession fears.

Geopolitical Worries
The crisis between Russia and Ukraine continues to spook the market, and further intensity may drag the markets lowers. The beleaguered supply chain worries are already weighing on sentiments. Apart from this, eased Covid-19 restrictions in China too will be tracked closely by the global participants.

India IIP Numbers
India will announce its industrial production numbers for September 2022, which includes the production from national factories, mines and utilities to measure the performance in secondary sector. Industrial production gauges the change in the total inflation-adjusted value of output manufacturers, quarries, and utilities produced.

India will also announce its CPI numbers during the week. The Consumer Price Index (CPI) measures the change in the prices of goods and services from the consumer perspective. The central bank pays close attention to this figure and its role in maintaining price stability.

Q2 Earnings
As the markets enter the final leg of the earnings season, a handful of companies will be widely tracked by the Dalal Street participants. The list includes bluechips like Coal India, Divis Labs, Tata Motors, Either Motors, Apollo Hospitals, LIC, Hindalco and M&M.

Bharat Petroleum, One 97 Communications (Paytm), Godrej Consumer, PI Industries, Bosch, Pidilite Industries, Star Health, Adani Green Energy, Zomato, Adani Power, Info Edge and ABB India are among the companies which will announce their earnings for the second quarter.

Rupee Movement
The movement of Indian currency against the greenback will be widely tracked by traders as India remains an import-heavy economy and needs to purchase dollars.

The rupee appreciated by 53 paise to close at 82.35 against the US dollar on Friday, boosted by persistent foreign fund inflows and a weakening greenback overseas.

"Euro and Pound too recovered on Friday from intraday lows as broader dollar retraced against its major crosses," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services. "We expect the USD-INR to trade sideways and quote in the range of 82.50-83.30."

FPI Flows
The buying and selling activity by global institutions will also remain among the key factors to watch out for. Amid buoyant sentiments, any change in their perspective may dent the markets as the New Year and holiday season inch closer.

K Dileep, Head of PMS at Geojit Financial Services, said that FPIs were net sellers in October, as they were in September. But November started on a good note. So far, they remain net buyers to the tune of over Rs 6,000 crore.

"Expect decent flow going forward as the growth story of India is intact," he added. "Better than expected earnings and comfortable macro numbers are positive for India compared to other emerging markets. I don't expect any drastic move in the market on either side for another couple of quarters."

Six IPOs
Investors will get a chance to bid for six initial public offerings in the upcoming week. This includes two ongoing issues of Global Health Limited (Medanta) and Bikaji Foods International, which will close for subscription on Monday, November 7.

Other than this, the Rs 1,960 crore issue of Five Star Business Finance and Rs 1,462 crore issue of Archean Chemical Industries will open for subscription on Wednesday, November 9.

They will be followed by the primary stake sale of Kaynes Technology, which will open for subscription on Thursday, November 10. Inox Green Energy, whose Rs 740 crore issue, will open for subscription on Friday, November 11.

Technical Outlook
Nifty continues to trade in green and managed to close above 18,100 levels on the weekly time frame. The daily chart has maintained its cycle of higher highs – higher lows, construing to have a bullish setup, said Apurva Sheth, Head of Market Perspectives, Samco Securities.

"On a technical aspect, the index is firmly placed above all the major exponential moving averages. We have seen some tentativeness at higher levels, but we do not construe this as any sign of worry. Traders are just opting to take some money off the table after seeing a decent up move in a previous couple of weeks," he added.