Geopolitical developments, COVID-19 trends key factors for market this week: Analysts
New Delhi: The domestic equity market will bring its focus back on developments around India-China tensions and updates related to the COVID-19 pandemic this week, with a slew of key macro data released over the past week suggesting a long road to recovery, according to analysts.
Last week, the BSE benchmark Sensex fell 2.81 per cent or 1,110 points, and the NSE gauge Nifty dropped 2.7 per cent or 314 points as investors turned cautious on weaker-than-expected GDP number and infrastructure output data.
“Going ahead, market is likely to remain in consolidative mode in the near term with more of sector/stock specific actions and intermittent profit-booking cannot be ruled out. Market would now be looking forward for positive signs of economic recovery and would track development around US stimulus announcement,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd, said.
Investors would also watch developments with respect to India-China border issue, he added.
As the situation in eastern Ladakh remains tense, Defence Minister Rajnath Singh has conveyed to his Chinese counterpart Wei Fenghe that China must strictly respect the Line of Actual Control (LAC) and not make attempts to unilaterally change its status quo.
In the first highest level face-to-face contact between the two sides after border tension erupted in eastern Ladakh in early May, Singh and Wei met for over two hours in Moscow last week on the sidelines of a meeting of the defence ministers of the Shanghai Cooperation Organisation(SCO).
Vinod Nair, Head of Research at Geojit Financial Services, said, “Uncertainties await the market this week, be it global economic data points or geo-political uncertainties related to Indo-China border tensions.”
Markets seem to have lost its momentum in the near-term and could be heading into a round of consolidation, Nair observed.
Meanwhile on the COVID-19 front, India’s tally of cases went past 41 lakh with a record 90,632 people being infected in a day, according to the Union Health Ministry data. The death toll climbed to 70,626 with the novel coronavirus virus claiming 1,065 lives in a span of 24 hours in the country.
Most experts are of the view that India-China tensions, mounting COVID-19 cases, global market developments are the key factors in the coming week.
Investors would also watch out for industrial production data scheduled to release on Friday after market hours.
Analysts said market sentiment will also be guided by trend in forex market and Brent crude movement.
The Indian rupee strengthened by 25 paise last week to end at 73.14 against the US dollar, helped by robust FPI inflows especially during August.