Saturday, October 01, 2016

THE WEEK AHEAD

RBI's policy outcome, macroeconomic data to dictate market trend


RBI's policy outcome, macro economic data, trend in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), the movement of rupee against the dollar and crude oil price movement will dictate market trend in the near term.

The major domestic event in the upcoming week is the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy meeting scheduled on Tuesday, 4 October 2016. The RBI after the third bi-monthly monetary policy on 9 August 2016, decided to keep the policy repo rate unchanged at 6.5%. Consequently, the reverse repo rate remained unchanged at 6%. RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4%. Shares of interest rate sensitive sectors may remain in focus on the eve of the Reserve Bank of India (RBI)'s monetary policy meeting.
Stocks of auto companies will be in focus as companies start unveiling monthly sales volume data for September 2016 from Saturday, 1 October 2016.

Stocks of public sector oil marketing companies (PSU OMCs) will be in focus as a fuel price review is due at the end of the month. PSU OMCs undertake fuel price review twice during the month based on the trend in international oil market. The first price review takes place during the middle of the month and the second on the last day of the month. Aviation stocks will be in focus as a monthly review of jet fuel prices is due at the end of the month. PSU OMCs review jet fuel prices on the last day every month based on the average imported crude oil price for the month. Prices of jet fuel are directly linked to crude oil prices.

In the primary market, the initial public offer (IPO) of auto parts manufacturer Endurance Technologies will open for bidding on 5 October 2016. The IPO closes on 7 October 2016. The price band for the IPO is Rs 467 to Rs 472 per share.

Investors will continue to track the progress of monsoon rains. The India Meteorological Department (IMD) in its weekly monsoon update issued on 29 September 2016 said that for the country as a whole, cumulative rainfall during this year's monsoon season so far from 1 June to 28 September was 3% below the long period average (LPA).

Among domestic macro economic data, Markit Economics will announce the India Manufacturing PMI data for September 2016 on Monday, 3 October 2016. 
Manufacturing PMI in India came in at 52.6 in August of 2016 from 51.8 in July.
On Wednesday, 5 October 2016, Markit Economics will announce the India Services PMI data for September 2016. Services PMI in India rose to 54.7 in August of 2016 from 51.9 in July.

On the global front, the National Bureau of Statistics will declare the China Non Manufacturing Purchasing Managers Index (PMI) data for September 2016 will be unveiled on Saturday, 1 October 2016. Non Manufacturing PMI in China came in at 53.5 in August of 2016, compared to 53.9 in July.

Markit Economics will announce the Manufacturing PMI for September 2016 in the United States. The flash Markit manufacturing PMI for the United States declined to 51.4 in September of 2016 from 52 in August.

On Friday, 7 October 2016, the US Bureau of Labor Statistics will announce the non farm payrolls report for September 2016. Total nonfarm payroll employment in the United States increased by 151,000 in August of 2016, lower than a upwardly revised 275,000 in July.

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