Sensex, Nifty to open in red: Five factors that may impact market this week

The domestic equity benchmarks are poised to start the week on a bearish note, tracking losses in Asia and Wall Street last week amid fear of more aggressive rate hikes by the U.S. Federal Reserve. Asian shares fell up to 2% in opening trade on Monday, led by Japan, South Korea, and Taiwan, as concerns about rate hikes in the United States and Europe soared investors’ appetite for riskier assets. The US Federal Reserve Chair Jerome Powell in his speech at the central banking conference on Friday said that the Fed would raise rates as high as necessary to curb inflation. Back home, negative trends on SGX Nifty also indicated a gap-down opening for the domestic bourses, with SGX Nifty futures trading 364 points, or 2%, lower at 17,294 levels on the Singapore Stock Exchange at 8:30 AM. Among individual stocks, shares of Reliance Industries will be in focus ahead of the 45th Annual General Meeting (AGM) of the index heavyweight.

On Friday, the Indian equities managed to close higher in choppy trade on Friday as caution prevailed in the market ahead of the Federal Reserve Chair Jerome Powell's speech at an annual economic conference in Jackson Hole for more clarity on the central bank’s future rate hike plans. The BSE Sensex added 59 points to close at 58,834 levels, while the broader Nifty50 gained 36 points to settle at 17,559. The top performing stocks on the Sensex pack were NTPC, Titan, Power Grid, Kotak Mahindra Bank, Larsen & Toubro, Tech Mahindra, Tata Steel, and Mahindra & Mahindra. On the other hand, IndusInd Bank, HDFC, Asian Paints, and Bharti Airtel were among the top losers. Overall, the domestic benchmarks snapped their five-week winning streak and closed lower last week, with the 30-share Sensex falling by 812 points or 1.36%, while the Nifty shed 200 points, or 1.12%, during the week ended August 26.

Here are five factors that will impact the share market this holiday-shortened week. The markets will be closed on Wednesday for Ganesh Chaturthi.

Reliance Industries AGM

Investors will keep a close eye on the 45th Annual General Meeting of Reliance Industries, the country’s most valued firm, which will begin at 2 pm on August 29, with a speech by Chairman Mukesh Ambani and other key members. There is wide speculation in the market that the oil-to-telecom conglomerate will make announcements regarding the listing of Jio Platforms and Reliance Retail. The company will also unveil plans regarding new energy business and roll out of 5G services.

In the annual report for FY22, which was released earlier this month, Mukesh Ambani told shareholders about RIL’s green transformation plan to become one of the world’s leaders in the fight against the crisis of climate change. In green energy, Reliance is developing end-to-end green energy solutions to make them available for everyone at the most affordable price, he said.

In FY22, RIL set up the Reliance New Energy Council (‘NEC’) to identify opportunities and engage in partnerships worldwide. It is eying to reinvent itself to become a new energy major, with a focused tech roadmap of 5 to 15 years. RIL also has committed to a net carbon zero emission goal by 2035.

FIIs trend

The foreign investors have turned bullish on Indian equities, thanks to improvement in corporate earnings and macro fundamentals. After making a net investment of nearly Rs 5,000 crore last month, foreign Portfolio Investors (FPIs) have injected Rs 49,250 crore so far in August. This is the highest investment by the FPIs in the current calendar year after they turned net buyers for the first time in July, after nine consecutive months of massive net outflows since October last year.

Auto sales

Later this week, automobile companies will release their monthly sales figure for the month of August. The auto firms mostly unveil their monthly sales numbers on September 1. So, investors will keep a track on auto stocks such as Maruti Suzuki, Mahindra & Mahindra, Tata Motors, Bajaj Auto, TVS Motor, Ashok Leyland, Eicher Motors, and Hero MotoCorp.

Macro data

This week some major macroeconomic data will be released, which will set tone for the domestic market. The first quarter GDP numbers for June quarter ended June 2022 is scheduled to be released on August 31, while Manufacturing PMI data for August will be out on September 1. Investors will also keep a track on foreign exchange reserves for the week ended August 26, which will be released on September 2.

Global cues

The domestic stock market will be influenced by the Federal Reserve Chair Jerome Powell's speech at the Fed's annual economic symposium in Jackson Hole on Friday. In his speech at Jackson Hole, Powell reiterated a hawkish tone to combat inflation, raising fresh concerns about the tight monetary conditions, which may inject near-term volatility in global equities.

Powell’s hawkish comments have raised chances of another 75 basis points interest rate hike for the third straight month in its upcoming September 20-21 policy meeting.

Besides, the ongoing Ukraine-Russia and fresh tensions between U.S. and China on the Taiwan issue will also have an impact on the global equity market. Any development on these geo-political crises will trigger volatility in the equity market.