Dalal Street Week Ahead | 10 key factors that will keep traders busy next week
The stellar run on Wednesday & Thursday helped the market close with a percent gain amid volatility in the week ended December 3, as investors and traders kept a close watch on new Covid variant Omicron that created lot of uncertainty globally. The fall in oil prices, good GDP growth in Q2FY22, and further uptrend in Manufacturing PMI also supported the equity, though rising expectations for faster Fed tapering limited upside.
Apart from that short covering and value buying in most beaten down quality stocks including index heavyweights also pushed the market higher. The BSE Sensex rallied 589.31 points to 57,696.46, and the Nifty50 climbed 170.25 points to 17,196.70, while the broader markets also joined the rally, with the BSE Midcap and Smallcap indices rising around 1.35 percent and 1.25 percent respectively.
Experts feel the market is expected to remain volatile in the coming week as well, amid Monetary Policy Committee meeting, Omicron uncertainty, and economic data.
"With a slew of events on the horizon, traders should brace themselves for an action-packed week. Market players will attempt to read between the lines of the RBI's monetary policy outcome," says Yesha Shah, Head of Equity Research at Samco Securities.
She further says inflation data for China and the United States are also due next week, which may add to the market volatility. Additionally, "as more clarity on the new Covid-19 version becomes available, investors can expect whipsaw movements in the markets."
Here are 10 key factors that will keep traders busy next week:
New Covid variant Omicron, which found in South Africa and later spread to nearly 30 countries including India, created lot of fear in the minds of investors and traders last week and that is expected to continue in the coming week, too. Now India reported fourth patient of Omicron that returned from South Africa, which resulted into tightening of Covid restrictions across the country, though overall Coronavirus cases are under control with India reporting less than 10,000 daily cases for more than a week now.
The government also increased testing and speed up vaccination across the country. More than 126.5 crore Covid vaccine doses, so far, were administered in the country including 37 percent of people finishing their second Covid vaccine dose.
RBI Policy
The Monetary Policy Committee, after three-day meeting, will disclose its interest rate decision on Wednesday. The street will closely watch how the RBI will react to the current Omicron crisis, economic growth, inflation numbers and hawkish US Fed. Experts largely feel the central bank could reduce the gap between repo rate and reverse repo rate and continue with VRRR (variable rate reverse repo).
"In this policy, there is a good chance that we may see a hike in the reverse repo rate because before raising the repo rate RBI has to bring down the corridor between the repo and reverse repo rate at 25 basis points from the current level of 65 basis points. In this policy, RBI may remain less accommodative citing inflation concern and hawkish US Fed," said Santosh Meena, Head of Research at Swastika Investmart
