After a volatile week in the bourses, Indian stock market are expected to show mixed reactions when stock exchanges open on Monday.
Following statements made by US federal reserve Chief, Jerome Powell regarding increasing interest rates, the Nifty 50 and Sensex closed markets at a flat on Friday.
Apprehensions among investors and traders about the possibilities of a global economic slowdown and recession in the European Union economies also made stock market choppy last week.
In the upcoming trading week, the Indian stock markets will be mainly influenced by factors such as the rupee-dollar exchange rate, reports regarding interest rate hikes in the USA, and inflation reports from China.
The movement of oil prices in the international market and increasing short positions of Foreign Portfolio Investors in the Nifty 50 are also probably going to influence the sentiments of the Indian bourses.
Major Factors to look for in the upcoming week
1 – Interest rate hike by the United States of America
A few days ago, US FED Chief Jerome Powell stated that the federal reserve will continue to follow aggressiveness in interest rate hikes to ensure the inflation rate in the country is brought down below the benchmark set by US Fed Reserve. He said that businesses and individuals might be affected by the interest rate hikes, but is better compared to the long-term negative impacts of a high inflation rate.
Investors and traders are expecting a 75 basis points increase in the interest rate and also assume that the aggressiveness in interest rate hike will continue until December 2022.
This will mean foreign investment in Indian stock markets will dry up as borrowing money to invest will get costlier in the United States of America.
2 – GDP growth of India
In the quarter that ended in June, the Indian economy grew by 13.5%, which was lower than the expectations of the market. Market analysts and economists had predicted a 15.5% increase in GDP.
As the GDP growth rate of India missed the mark, international and national financial services agencies have trimmed down the GDP growth estimates of the country for the current financial year.
This will have a significant impact on both domestic and international traders and investors in the Indian stock market.
3 – Inflation Rate in China
China which is the second largest economy in the world will release its Inflation numbers on September 8th.
The numbers from the Chinese economy, which has been going through an unpleasant phase for the last couple of months will have a deep on how markets react in the upcoming week.
4 – International Oil Prices
Since the beginning of the Russian special military operation in Ukraine, oil prices have gone up and down like a swing.
The oil price which is currently placed at nearly 93 dollars per barrel is expected to rise in the coming week as the Organisation of Petroleum Exporting Countries (OPEC) is reportedly planning to cut back its production.
The economical move by the European Union and the USA to cap prices of Russian Oil might ask to trigger a price increase for oil in the international market