Weekly Stock Market Triggers to watch out (Monday 19th Dec, 22)

The week starting 19th December is likely to be relatively subdued for a number of reasons. The data flows are relatively smaller this week compared to the previous week, which was dominated by domestic and international data flows. Secondly, we are less than a week away from the Christmas holidays and that is the time when most of the global investors are trying to rest on their laurels for the week. Hence, one cannot expect too much of action towards the end of the year. At best FPIs could be marginal players or they could be nibbling away at stocks in the side lines. In these conditions, what are the major triggers for the stock markets in the coming week starting 19th December? Here we go.

1. Nifty and the smaller indices closed the week with losses, largely due to the sharp correction in the second half of the week after the Fed policy statement. While the Nifty was down 1.3% for the week, led by Reliance Industries, the mid-cap and small cap indices were also lower by around 1%. For the coming week, lacklustre trading is expecting in large caps, while alpha hunting in smaller stocks will be limited for now.
   Read: Traders advised to have 'wait-and-watch approach'

2. There are likely to be two factors that would make traders and investors cautious over the year end. Firstly, most global investors to keep their shorter term positions light towards the end of the year to avoid any surprises on the MTM front. Secondly, fresh allocations for most fund houses will only happen in the first week of January. So, the week maybe more about protecting gains in the market.
    

3. The Fed GDP data (third and final estimates) would be out for Q3 in the week. The BEA will put out the final estimates on 22nd December. This is likely to be special, because the first two estimates for Q3 had pegged real GDP growth at 2.6% and 2.9%. If the final estimate holds around 2.9%, it will be a big relief after the US economy contracted in the first and second quarters. However, irrespective of the outcome of the GDP data, cautious reaction of the US markets to the Fed statement will continue this week.
    

4. Year 2022 may be much less impressive in terms of IPO collections compared to 2021. In fact, year 2022 is likely to see less than half the collections of 2021. There are 2 IPOs opening in the coming week to collect Rs. 1,975 crore in all. The larger IPO of KFIN Technologies will raise Rs. 1,500 crore via an offer for sale (OFS) while the IPO of Elin Electronics will raise Rs. 475 crore, via a mix of fresh issue and an OFS. In addition, 3 IPOs are also slated to list in the coming week. While Sula Vineyards Ltd IPO will list on Thursday, 22nd December, the IPOs of Abans Holdings and of Landmark Cars will list in the bourses on 23rd December.
    

5. In an important monetary policy development this week, the RBI will put out the minutes of the Monetary Policy Committee (MPC) on Wednesday 21st December. This is important as it gives an insight into the specific comments and objections raised by each of the six members of the MPC. The MPC minutes should give the first picture of whether the RBI would persist with rate hikes or call for a respite in its next MPC meeting scheduled in early February 2023.
    

6. Let us now turn to two important cues for the week viz. FPI flows and crude oil prices. FPIs were net sellers last week, but are still net buyers in the month of December overall to the tune of more than Rs. 10,500 crore. However, not too much of positive action can be expected in the last couple of weeks, as is the norm. Regarding oil, the Brent Crude has stayed below $80/bbl and is likely to remain under pressure on global slowdown expectations. It is unlikely that OPEC may attempt a very sharp supply cut at a time when the Russian supply is already an overhang in the market.
    

7. In terms of market technical internals, the volatility index (VIX) has bounced from sub-12 levels to above the 14 levels indicating that there is rising uncertainty in the markets. That is not too encouraging and is likely to convert this into a sell on rises market till the end of the year. The broad range for the Nifty for this week is expected to be between 18,100 and 18,600 levels. One concern is that the Nifty chart has been making consistent lower tops and lower bottoms, which is a sign of pressure building up in markets.
    

8. Finally, let us turn to the major global data points to watch out for. Key data points to watch out for in the US markets this week include Housing starts, API crude stocks, current account balance, Q3 GDP final estimates, jobless claims, personal income and spending as well as durable goods orders. In other global cues, markets are likely to focus on Wages Growth Current Account Deficit (in EU); Interest rate decision, Inflation (in Japan) as well as Q3 GDP, Current Account Deficit and Car Production (in the UK).