Dalal Street Week Ahead: Key factors to watch including RBI policy, US Jobs Data, and PMI Numbers

As we look forward to the upcoming week, the market is set to respond to several key factors. On Monday, the market will first react to the recent release of monthly auto sales data and the reported decline in GDP to a multi-quarter low of 5.4 percent for Q2FY25. Overall, the market is expected to remain rangebound with a positive bias, focusing on the RBI policy, US jobs data, and PMI numbers, among other developments.

Market Performance and Sentiment

The market gained nearly 1 percent for the week ending November 29, continuing an upward rally and signaling positive sentiment following recent corrections and consolidation. Factors contributing to this positive sentiment include easing geopolitical tensions, anticipated increases in government spending, and expected recovery in corporate earnings in the second half of FY25. The strong victory of the BJP-led alliance in the Maharashtra elections, a fall in oil prices, and MSCI rebalancing also bolstered the market mood.

The BSE Sensex rose 0.87 percent during the week to 79,803, and the Nifty 50 jumped 0.94 percent to 24,131. Broader markets outperformed the benchmark indices, with the Nifty Midcap 100 index climbing 2.5 percent and the Smallcap 100 index rallying 5 percent.

Vinod Nair, Head of Research at Geojit Financial Services, highlighted the importance of the steadiness of incoming economic data in determining market stability. Investors are particularly keen on the upcoming RBI monetary policy.

10 Key Factors to Watch

RBI Monetary Policy: The final Monetary Policy Committee meeting of the year is scheduled for December 4-6. Despite the slowdown in growth in the September quarter, most experts do not anticipate any change in the repo rate due to high inflation, which was 6.21 percent in October. The central bank's commentary on the timeline for potential rate cuts and growth forecasts will be crucial.

Global Economic Data: Key data points from the US, including factory orders, vehicle sales, unemployment rate, JOLTs job openings, and non-farm payrolls, will influence investor sentiment. Speeches by Federal Reserve officials, including Chair Jerome Powell, will also be closely monitored.

Oil Prices: The sharp fall in oil prices last week due to reduced tensions in the Middle East positively impacted the Indian equity markets. Experts expect oil prices to remain volatile with a bearish bias in the coming week.

Domestic Economic Data: Market participants will focus on HSBC Manufacturing PMI and Services PMI data for November, as well as foreign exchange reserves data for the week ending November 29.

FII Flow: Foreign institutional investors' activity will be closely watched. Despite renewed buying interest, FIIs remained net sellers last week. However, domestic institutional investors offset this outflow with significant buying.

IPO Activity: The primary market will see a slowdown in IPO launches, with only three public issues scheduled for next week, including Property Share Investment Trust's Rs 353-crore IPO and two SME segment issues.

Technical View: The Nifty 50 remains above the 50-week EMA, indicating buying interest at lower levels. The index needs to surpass and sustain above 24,700 for a strong upward rally, with immediate support seen at 23,900.

F&O Cues: Weekly options data suggest the Nifty 50 is likely to trade within the 24,000-25,000 range. Key levels to watch include support at 23,800 and resistance at 25,500.

India VIX: The volatility index, India VIX, fell by 10.4 percent to 14.43, providing comfort for bulls. A further decline in volatility could boost market sentiment.

Corporate Actions: Several key corporate actions are scheduled for the upcoming week, which could influence market movements.