RBI policy, Q2 numbers among key factors that may drive market this week

New Delhi: The domestic equity market ended September on a weak note, posting a sharp fall after scaling a new lifetime high. A four-day losing streak made the BSE Sensex and Nifty50 give up more than 2 per cent each to end the week at 58,765.58 and 17,532.05, respectively. However, the broader market outperformed as BSE midcap and smallcap indices ended the week with mild gains.

Indian indices failed to maintain the momentum as volatility remained high due to weak global cues and the absence of any fresh domestic cues to lift the market further.

Vinod Nair, Head of Research at Geojit Financial Services, said the domestic market remained in a consolidation phase throughout the week amid no major positive domestic cues to withstand the negative pressure from global markets.


"Worries over the US debt ceiling crisis along with an uptick in yield and crude oil price created concerns in the global market. Continued worries over the Chinese economy also added pressure on Asian equities," he added.

This week, market participants will be keenly watching RBI monetary policy which is likely to provide momentum to Dalal street. Q2 earnings and India’s service PMI readings would also be keenly watched.

Here are the key factors that may steer the market going ahead:

RBI Monetary Policy: The Reserve Bank of India is scheduled to announce its bi-monthly monetary policy on Friday, October 8.

The central bank is expected to maintain its accommodative stance to maintain adequate liquidity in the system and to support economic activity. Also, it will be important to listen to the commentary of RBI Governor Shaktikanta Das.

Q2 Earnings: India Inc will officially kick off the earning season for September quarter as the largest IT player Tata Consultancy Services (TCS) will announce its Q2 results on Friday, October 8. Most of the projections are priced in by the market for the IT sector.

India's service PMI: India ended the first half of the ongoing fiscal year with a decent number of positive news on the economic front. India’s service PMI is also due to be released next week. Service sector is the dominating sector in the domestic economy.

Services grew for the first time in four months to a one-and-a-half year high in August, showed IHS Markit Purchasing Managers' Index (PMI) survey. The index rose to 56.7 in August from 45.4 in the previous month. A reading above 50 shows expansion and one below that means contraction.

Global Cues: Global markets have been quite volatile recently, with some weaknesses. The biggest worry is inflation and signs of slowdown in China. Furthermore, the US market is also showing some signs of plateauing in growth. The market will have an eye on global data to get further direction.

Crude Output: Ahead of the OPEC meeting to determine output for November, market participants should brace themselves for greater volatility in crude oil prices. This is likely to impact inflation and equity markets in the coming week.

Technical Outlook: Nifty50 posted a big bearish candle after eight weeks of sharp rise. Although Nifty is now trading around its short-term averages, it is still outperforming global peers and trading overbought in the short term, said a report by Samco Research.

"So a further slight correction up to 17,250 - 17,200 cannot be ruled out. Traders are suggested to maintain a buy on dips approach as positional outlook still remains bullish as long as Nifty does not break below 17,000," it added.