New Delhi: Domestic equity markets witnessed lacklustre trade in a holiday-curtailed week, but benchmark indices ended higher, posting mild gains.
BSE Barometer Sensex and its NSE counterpart Nifty50 added up 0.3 per cent each, whereas BSE midcap and smallcap indices added over a per cent each.
Indian indices failed to maintain the momentum they witnessed during the previous week as volatility remained high due to weak global markets and the absence of any fresh domestic cues to lift the market further, said Vinod Nair, Head of Research at Geojit Financial Services.
“However, broader markets showed resilience and outperformed the benchmark. Increasing Covid cases across the globe added to the market worries,” he added.
This week, market momentum is likely to be provided by Inflation numbers of India and the United States. The shortage of semiconductor chips may dent sentiments for RIL and auto. IPO listing and the new issues will also be the focus of investors at Dalal Street.
Here are the key factors that may steer the market going ahead:
The National Statistical Office (NSO), under the Ministry of Statistics will release India’s inflation numbers for August this week.
The Consumer Price Index (CPI) numbers will be released on Monday, whereas the wholesale price index (WPI) numbers for food, fuel and manufacturing will be declared on Tuesday.
India’s Wholesale Price Index in July 2021 eased to 11.16 per cent YoY as it finally fell below 12 per cent after seeing a record high in May. Similarly, consumer prices rose 5.59 per cent in July from the same month last year.
Last week, Reserve Bank of India Governor Shaktikanta Das said that during the Covid pandemic, the central bank’s focus was primarily on reviving growth and inflation targeting did not pivot on the 4 per cent medium-term aim, but rather the 2-6 per cent band that the government has set for the Monetary Policy Committee.
US economic data
The United States, the world’s largest economy, will announce its key Core Consumer Price Index (CPI) for August. Core retail sales numbers will also be announced, which is a key indicator of consumer spending.
It will also announce the initial jobless claims, measuring the new unemployment insurance during the week. A higher reading can jitter the sentiments. The number of Americans seeking unemployment benefits fell last week to 310,000, a pandemic low.
Come Tuesday and Dalal Street will witness the listing of shares of Ami Organics and Vijaya Diagnostic Center. Both the issues were open for subscription from September 1 to 3.
The Rs 570-crore IPO of Ami Organics was subscribed by 64.54 times and the company sold its shares in the price band of Rs 603-610 per share. The Rs 1,895-crore IPO of Vijaya Diagnostic’s received 4.54 times subscription for a price band of Rs 522-531.
A new IPO
The Bengaluru-based auto component maker Sansera Engineering’s IPO will hit Dalal street in the coming week. The Rs 1,283 crore IPO can be subscribed between September 14-16 at a fixed price band of Rs 734-744 apiece.
The issue is a pure offer for sale of 17,244,328 shares by its existing shareholders and promoters. Investors can bid for a minimum of 20 equity shares and in multiples of 20 equity shares thereafter.
Chip shortage troubles
The semiconductor chip shortage has put most industries, especially the auto sector, on a bumpy road. This chip shortage has delayed the launch of the JioPhone Next, apart from hurting the automobile production.
According to industry body Society of Indian Automobile Manufacturers (SIAM), the wholesale figures for the auto sector declined 11 per cent to 15.87 lakh units as global semiconductor shortage weighed down production.
Spread of the Delta variant
The widespread Delta variant scare across the globe may lead to some profit booking in the equity market as the scare may lead to concerns over economic recovery.
Covid-19 resurgence could force economies to shut down again. Market participants would not like the hiatus in the equity bull run.
“Nifty 50 index, after the recent sharp rise, has been witnessing a bit of a slowdown around the key rising resistance line. Major global indices also seem to be reverting to their short-term mean. So a mild pullback by our index towards short-term averages cannot be ruled out,” Samco Securities Research
The trend continues to remain bullish and traders are advised to initiate long positions only around dips to minimize the risk of being capitalized at extreme levels. Immediate support on the downside is now placed at 16,500, it added.