Fed meet, FII flow and IPOs among factors that may steer market this week

NEW DELHI: The market was plagued with volatile moves but still managed to extend the recovery for the second consecutive week. After a subdued beginning to the week, updates on the new Covid variant being less impactful and RBI’s dovish stance triggered a gradual up move in the following sessions.

This week is going to be critical for the market as we have some important data releases and events lined up. First, participants will react to IIP data on Monday. Both CPI and WPI inflation data are also scheduled in the following sessions. The primary market will also be abuzz with a flurry of activities.

“Updates on the global Covid situation will remain on participants’ radar. Though the fear about the new Covid-19 variant has subsided, we’re still seeing volatility across the globe and expect the trend to continue. Going ahead, we feel the recovery would remain uneven. We, thus, recommend continuing with a positive yet cautious approach,” said Ajit Mishra, VP Research, Religare Broking.

Below are the key factors that may guide market this week:

Fed meet
The US Federal Reserve’s FOMC will meet during the week. The central bank is widely expected to announce that it will accelerate the timing of its tapering of the bond-buying program launched last year after data showed that consumer price inflation in the US was at 6.8 per cent in November.

US Fed chief Jerome Powell has already thrown his weight behind an accelerated tapering and suggested that inflation in the US may no longer be transitory. Fed’s change in stance was a cue for foreign investors to accelerate their selling intensity in emerging markets like India.

IPO frenzy to continue
There are three initial public offerings (IPO) lined up for this week. IPOs of HP Adhesives, Data Patterns, Medplus Health Services will open for subscription. Besides, the IPOs of Metro Brands and CE Info Systems are also active, though they have seen mixed response from investors.

Inflation data
India will announce its retail and wholesale inflation data for November during the week. Retail inflation is likely to tick up to 5.1 per cent, consensus data available with Trading Economics shows. Wholesale inflation, on the other hand, may ease marginally.

Omicron variant
The market will also keep an eye on any adverse development on Covid-19 front. India has 30-odd Omicron variant cases, and all of them are “mild”, the government has said, but any sharp increase in the number will have a negative impact. Moreover, restriction in many parts of Europe has been strengthened and the Street will also watch the progress of coronavirus there.

FII selling
Foreign investors continued to be net sellers during the week, a trend that has been continuing from the last two months. They sold equities to the tune of Rs 9,700 crore this week in the secondary market. However, that has failed to diminish the enthusiasm of domestic investors.

“Since FPIs have large holdings in banks and IT, they may continue to sell in these segments. But the pace of selling is likely to come down if the market remains resilient,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Read More: Fed meet, FII flow and IPOs among factors that may steer market this week

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