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    Poll results, oil price and 5 other factors that will drive market this week

    Synopsis

    A number of key macroeconomic data, including CPI and WPI prints, are slated for the week.

    Poll results, oil price and 5 other factors that will drive market this weekGetty Images
    Crude oil prices, after a cut in production, may influence domestic market movement.
    NEW DELHI: Despite Friday’s robust gains, equity benchmarks Sensex and Nifty ended the week gone by with a loss of 1.44 per cent and 1.68 per cent, respectively.

    RBI last week nixed hopes of liquidity boost to NBFCs, Opec decided to go for a major crude output cut and the arrest of a senior Huawei executive flared up trade tensions between the US and China.

    State election results, inflation numbers and geopolitical developments will be the key factors deciding the course of the market during the week ahead. Let's take a look:

    The D-day
    All eyes will be on December 11, Tuesday, when the results of assembly elections in MP, Rajasthan, Chhattisgarh, Telangana and Mizoram will come out. The elections were touted as the semifinal to the general election 2019 and the market may see a sharp correction if they show diminishing prospects for the BJP. “A 3-0 score for BJP may extend the current market rally while a 0-3 or 1-2 loss (Madhya Pradesh and Rajasthan) may result in a sharp correction, as the market is likely to take a dim view of the BJP’s prospects in the 2019 general elections,” Kotak Institutional Equities Research said in a report.

    Exit polls by several channels have predicted a photo finish between BJP and Congress in MP and Chhattisgarh, while Congress is seen taking a lead in Rajasthan.

    The US-China saga
    The market is holding its breath and praying for longevity of the trade truce between the US and China, which seemed to have been jeopardised by the arrest of Huawei Technologies CFO Meng Wanzhou. The arrest may aggravate an already tense trade relation between the US and China. Reuters said former US Treasury Secretary Henry Paulson warned last month of the prospect of an international “economic iron curtain” coming down on Huawei. Chinese people on their social media platform Weibo have strongly condemned the move terming it as an attempt of undermining country’s economic future and its pride.

    European turmoil
    Two major happenings in Europe may have greater political and economic significance - Britain's Brexit and France's 'yellow vest' protest. The British Parliament will vote on Brexit on Tuesday, but the probability of Theresa May's Brexit transition deal getting approved looks feeble. The Brexit chaos is likely to hit sterling and equity markets.

    France's ‘yellow vests’ movement against President Emmanuel Macron over an eco-tax on gas prices is gaining worrying proportions. By mid-afternoon Saturday, police arrested more than 1,000 people nationwide and held 720 in custody, with 135, including security personnel injured. The protests have also spread to Belgium and the Netherlands, as hundreds of ‘yellow-vests’ descended upon the streets of Brussels and Rotterdam.

    Spectre of a recession
    US treasury yields are making analysts worried. An inverted yield curve - when short-term bonds give more returns than a long-term bond - is signalling all is not well with the US economy. Such curve inversion has preceded every recession in last 40 years. Now, the market is watching with rapt attention how Fed will react amid signs of slowdown when inflation is running high and the rate of unemployment is at a near-50 year low.

    Macro data to watch
    A number of key macroeconomic prints are slated for the week. India's industrial production and manufacturing output data for October will be released on Wednesday. Inflation prints - CPI and WPI - for November will be out on Wednesday and Friday, respectively. On the global front, investors will be watching US non-farm payrolls report, US core inflation data, China's inflation data and China's balance of trade data.

    Crude price movement
    The Opec cartel and its Russia-led allies have decided to cut oil production from January by 0.8 million barrels per day from October levels. The decision made crude oil prices jump up to 5 per cent in global markets. The prospects of higher crude prices are not a good omen for India, which is a major importer of crude oil. The Indian currency may come under pressure if oil price rises, which will have a bearing on the country's fiscal maths.

    Technical outlook
    The Nifty on Friday settled just shy of the 10,700 mark, as the index formed an ‘Inside Bar’ on the daily chart and remained below its 200-Day Moving Average (DMA). Analysts believe one should not read too much into Friday’s gains unless the index closes above the 10,748 level. “The key support for equity benchmarks for the week is seen at 35,000/10,480 while a resistance is seen at 36,230/10,870. Bank Nifty would have a range of 25,930-27,150,” said Vaishali Parekh, senior technical analyst at Prabhudas Lilladher.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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