China crisis to ECB meeting: 5 factors that may impact stock market this week

“We witnessed some correction in Nifty during the week but the index has not breached its important support levels. It has retraced recent upside move from 15180 to 16270 by 38.2 percent and the rising trendline support around 15800 has also not been breached. On the lower time frame chart, a ‘Higher Top Higher Bottom’ structure is seen which is still valid and until the index breaks the important support of 15800, the near term outlook remains bullish,” said Ruchit Jain, Lead Research at 5paisa.com.

Expecting more from the bulls when market opens next week, Mehul Kothari, AVP — Technical Research at Anand Rathi said, “Although the final session of the week ended on an optimistic note but the bulls still have a lot to catch up. The index NIFTY spot started the week with a downside gap and then kept on inching lower to sneak below 15900 mark. However at the end of the week; it managed to recover sharply and reclaim 16000 level. Eventually; it lost around a percent during the week.”

So, stock market investors are advised to remain vigilant about the top triggers that may dictate the Dalal Street movement when market reopens on Monday. Here we list out top 5 triggers that may dictate stock market movement next week:

1] ECB meeting: The European Central Bank (ECB) policy meeting is scheduled next week, which is expected to address inflation and other Eurozone crisis.

Suggesting stock market observers and investors to remain vigilant against the ECB meeting, Divam Sharma, Founder at Green Portfolio said, “Eurozone inflation numbers are anticipated in the coming week, with the Euro reaching a parity of 1:1 with the US Dollar for the first time in two decades, and the Nord Stream 1 pipeline being closed for maintenance, the energy costs for the continent might continue to soar, especially post the shutdown of key plants in the US which were large exporters to Europe. Focus on renewable energy will increase multifold.”

2] China crisis: “The aftermath of the Evergrande crisis in China is slowly snowballing into a big hit on the Chinese real estate as the non-payment of mortgages rise to about 100 developers, the crisis is now becoming big enough to hit the financial system of China which is sitting on $6.8 Trillion of outstanding mortgages from the hard-pressed developers,” said Divam Sharma of Green Portfolio.

3] Q1 results: Q1FY23 earning season began with the announcement of IT sectors, worsening global macros in terms of rising inflation, economic slowdown, currency headwinds, and likely to cut spending revenue growth taper down to low double-digit growth in FY24E.

“Traders and investors are expected to keep an eye on upcoming company results as Q1 results of HDFC life, ICICIGI, HUL, Wipro, Polycab India, AU small finance bank, etc. and everyone will be watching for any upgrades or downgrades and positive or negative commentary on stock and sector-specific. For those who believe in the sector and stock-specific trade during unstable markets, upcoming Q1 earnings would be vital for the Indian stock market,” said Jitendra Upadhyay, Senior Equity Research Analyst at Bonanza Portfolio.

4] Rupee vs dollar: “Indian Rupee is at a lifetime low. We are already touched at 79.99 rupees for each dollar, and we could see the number further deteriorate from here. The depreciating rupee has a widespread effect on our trade balance, inflation numbers, foreign education, foreign travel, remittance, and growth and will be a key trigger,” said Jitendra Upadhyay of Bonanza Portfolio.

5] US manufacturing data: After US inflation data climbing up to 41-year high, all eyes are now set on the US manufacturing and service PMI data that will lead to further volatility in the global equity markets.

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

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