Sensex: Sensex Week Ahead: RBI policy, IPOs, macro data to steer market

With the ‘feel good’ factor evaporated and the market finally coming to terms with macro-economic reality, the ongoing correction in the domestic equities is likely to sustain. With a sharp U-turn, the stock market has been a perfect epitome of the saying, ‘change is the only constant’. From being the apple of the eye of investors, especially FIIs, domestic stocks are now witnessing outright rejection by them – all in just six months.

Rising concerns about slowing economic growth and speculation that the government may tinker with fiscal discipline have been major factors behind the pause in the Bull Run. Last week, the domestic indices witnessed the biggest losing streak of the year.

Foreign investors sold $1.11 billion worth of Indian stocks in September, adding to their $2 billion outflow last month in the longest streak since the more than $4.5 billion from last October to January, Reuters reported.

That said, let’s check what’s lined up for the week ahead. The market will remain closed on Monday, October 2, 2017, on account of Gandhi Jayanti.

RBI policy review: Will it surprise
The fourth bimonthly rate-setting meeting of the financial year of RBI’s Monetary Policy Committee (MPC) is scheduled for October 3-4. With inflation firming up and the rupee coming under pressure, many economists feel the central bank will vote to keep the repo rate unchanged at 6 per cent.

“RBI is likely to leave rates unchanged while maintaining a dovish bias. The status quo on rates will likely be guided by two reasons; 1) while growth concerns continue to persist (RBI acknowledged as much in its last policy review), policymakers would like to ensure that CPI rebound is contained; 2) recent trends in global economy – spike in crude oil and rise in dollar, reduces RBI’s elbow room to pursue monetary easing. Thus, the apex bank would likely adopt a cautious approach for now. However, we expect Mint Street to keep the room open for further easing down the line,” said Edelweiss Securities.

Auto stocks await festive sales report
Shares of auto companies are likely to stay in focus in the coming week as they will start releasing their monthly sales numbers for September starting October 1, 2017. Automakers put up a stellar show in August. With festive fervour all around, the figures for September are likely to be robust too.

Technical charts do not look promising
On Friday, the Nifty50 index registered a small bearish candle on the daily chart that resembled a ‘Shooting Star’ formation. Experts said unless the index breaks above the 9,921 level on a sustainable basis, downward pressure will persist. Chandan Taparia of Motilal Oswal Securities said the index has to continue to hold above the 9,777 level, if it were to see a bounce towards 9,850 and 9,928 levels.

SBI Life listing on Tuesday
SBI Life Insurance, which completed its initial share sale last week, will make stock market debut on Tuesday, ie. October 3, 2017. Its IPO of Rs 8,400 crore was oversubscribed 3.58 times on September 20-22. SBI Life is a joint venture between India’s largest lender State Bank of India (SBI) and BNP Paribas Cardif (BNPPC), the insurance holding company of France.

Macro data may spoil the mood
A slew of economic data due next week will play a crucial role in market’s movement. Reeling under the pathetic GDP growth rate of 5.7 per cent and huge selloff by foreign investors, the market really needs some major positive news and trigger to get back to its rhythm.

However, at this point of time, it looks like a far-fetched thing as the fiscal deficit touched 96.1% of the Budget estimate for FY18 at the end of August as the government kept its foot on the spending pedal to support the economy while revenues came in at their usual modest pace in the opening months of the financial year. Nikkei India PMI Manufacturing and Nikkei India PMI Services data for September are slated to release on Oct 3 and Oct 5, respectively. Geopolitical tensions, rupee movement and crude prices will also play a key role in determining market’s course during the next week.

Two IPOs open this week
Godrej Agrovet and MAS Financial Services will hit the market with initial public offerings next week. Godrej Agrovet, promoted by Godrej Industries, has fixed the price band for its IPO at Rs 450-460 per share. The IPO opens on October 4 and closes on October 6, 2017. MAS Financial Services is coming up with its issue to raise up to Rs 460.04 crore. The price band has been fixed at Rs 456-459 a share for the issue, which opens on October 6 and closes on October 10.

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