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After RBI meet, all eyes now on inflation data

India’ equity market ended on a strong note last week despite a weak start due to concern of rising cases of omicron variant.

Published: 13th December 2021 09:42 AM  |   Last Updated: 13th December 2021 09:42 AM   |  A+A-

RBI

Reserve Bank of India (Photo | PTI)

By Express News Service

NEW DELHI: India’ equity market ended on a strong note last week despite a weak start due to concern of rising cases of omicron variant. The market then witnessed a sharp recovery, thanks to easing concerns of omicron and dovish RBI policy.

Sensex and Nifty ended last week with healthy gains of nearly 2% to close at 58,786.67 levels and 17,511.30 levels, respectively. Amongst the sector, most indices ended in the positive with realty, metals and capital goods being the top gainers. On the broader market front, midcap and small-cap too ended in the green in the range of 2.1-3%

Going ahead this week, the decision of the US Fed that is scheduled on 15th December is likely to have a major impact on market movement. Beside this, market participants will keenly watch inflation data and spread of the omicron variant of coronavirus.

Yesha Shah, Head of Equity Research, Samco Securities, “Domestic inflation data and the FOMC (Federal Open Market Committee) meeting will be crucial events that will dominate movements in the Indian benchmark indices. Because the RBI provided no guidance on the rate hike timeline, all eyes will be on the stand FOMC adopts on tapering and interest rate hike trajectory. While it is widely expected that the FED will consider the intensity of the Omicron variant before aggressively preponing tapering plans, any surprises in the announcements can cause choppy movements. Thus, investors should remain cautious and consider value investing till the markets continue to let off steam from excess valuations.”

Santosh Meena, Head of Research, Swastika Investmart, said that European Central Bank, Bank of England, Swiss National Bank, and Bank of Japan will also come out with their monetary policies this week. The recently announced US inflation numbers are in line with expectations and it was not as bad as there was fear therefore the market is not expecting any negative surprise from the US Fed.

The US inflation rate rose 6.8% over the last year, the highest increase since 1982, Bureau of Labor Statistics said recently. Inflation rose 0.8% in November after rising 0.9% in October.Meena added that the impact of the omicron variant on the market has cooled off but the news flows related to omicron may continue to cause some volatility. 

He also said that it is not a clear trend in the dollar index and US 10-year bond yields, however, our market will be interested to know FIIs’ behavior after a period of relentless selling.Ajit Mishra, VP - Research, Religare Broking, said, that going ahead, we feel the recovery would remain uneven, thus recommend continuing with a positive yet cautious approach.

“On the index front, Nifty would face resistance around 17,600 and 17,800 zone while on the downside, 17,300-17,150 zone would act as a cushion in case of any dip. Since we’re seeing a mixed trend across sectors, the focus should be on stock selection,” added Mishra.

How markets fared last week

Sensex and Nifty ended last week with healthy gains of nearly 2% to close at 58,786.67 levels and 17,511.30 levels, respectively. Amongst the sector, most indices ended in the positive. 



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