RBI MPC and Crude Oil Among Top 10 Factors to Impact D-Street Mood This Week

RBI MPC and Crude Oil Among Top 10 Factors to Impact D-Street Mood This Week

Ira Singh
2 Oct’23

As the financial markets gear up for another week of trading, investors are keeping a close eye on a myriad of factors that are set to influence the mood on Dalal Street. The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting and the volatile movements in crude oil prices are poised to be among the top 10 factors driving market sentiment this week.

Indian frontline indices S&P BSE Sensex and Nifty50 ended the week on weak footing, dragged by concerns over rising crude oil prices and rising bond yields.Amid a host of important domestic and global events lined up during this week, know what lies ahead for the holiday-shortened stock markets.

Indian markets will remain shut for trading on Monday, October 2 on account of Mahatma Gandhi’s birth anniversary.

Amid mounting concerns stemming from escalating crude oil prices and inflationary pressures which were compounded by fears of another rate hike by the Fed, the domestic market grappled with volatility throughout the week.The increase in US bond yields and volatility in Indian Rupee further diminished the attractiveness of domestic indices for foreign investors , Vinod Nair, Head of Research at Geojit Financial Services said.Nair expects volatility to remain elevated in the short term,given the upside risk of domestic inflation on account of higher crude oil prices and dubs it crucial for investors to look out for the upcoming releases of domestic,US and Chinese PMI(Purchasing Managers’ Index)data among other indicators which will likely shape future market trends.

Factors that are likely to impact movement when markets reopen this week include:

RBI MPC
Indian markets will be keeping a close watch on the upcoming Reserve Bank of India’s(RBI) monetary policy announcements,this week as the monetary policy committee assembles for a three day event starting October 4, Wednesday.The RBI Governor will announce the committee’s decision on October 6 and it is expected that he will maintain the status quo on key policy rates, according to media reports.

US Markets
US markets ended in the green on Friday after a softer than expected personal consumption expenditure (PCE) price index,considered to be Fed’s preferred inflation gauge, climbed 0.4% in August month on month against estimates of a 0.5% rise, according to reports.

When Indian market reopen on Tuesday they will take cues from the Monday closing of the US markets.They will also track movement in GIFT Nifty futures on Tuesday.The latter is an early indicator of movement in the Nifty50 and on Tuesday.

Global Macros
US to publish S&P Global Manufacturing PMI data, Global Composite Services PMI’s,US Trade and initial jobless claims data this week, according to information.

As for the Eurozone Global Manufacturing PMI, unemployment , services PMI retail sales and PPI data.

Rupee vs Dollar

The Indian rupee closed stronger at 83.04 against the US dollar on Friday as a pullback in the dollar index and steady crude oil prices offered some relief to the local unit.

Likely interventions from RBI helped avert the rupee’s fall and helped the rupee rank among the best performing major Asian currencies in September.

Besides,technical factors containing RBI MPC outcomes,FII(Foreign Institutional Investors)/DII(Domestic Institutional investors) action, Corporate action including India auto sales numbers to be announced on October 1,IPO’s ,yellow metal trading chart for the month and crude oil prices are the other factors to impact movement when market reopen this week.

As the week unfolds, market participants will be navigating these factors, trying to gauge their impact on stock prices and investment strategies. The interplay of these variables will determine whether D-Street experiences a bullish or bearish sentiment in the days ahead. Investors and traders should remain vigilant and adaptable in response to evolving market conditions.