With the impending State election results, macro-economic data and the ongoing geo-political tension after the arrest of Huawei executive, the Indian equity market is likely to witness choppy trade this week, which is likely to keep investors on the edge.
Let's take a look five factors that the Street will be keeping an eye on.
State Assembly Results
With conclusion of assembly elections in five states, all eyes will be on the results, which would be declared on Tuesday. Markets may witness knee-jerk reaction as exit polls on Friday indicated that the Bharatiya Janata Party (BJP) risks losing power in Rajasthan and Madhya Pradesh to Congress due to anti-incumbency factor.
According to market analysts, the announcement of assembly elections results of five states will only add to the ongoing volatility in the market, which is already under pressure due to falling rupee and rising crude oil prices.
Macro-economic Indicators
After the Reserve bank policy announcement last week, all eyes will be on slew of macro-economic data which will be released later this week. The government will release Consumer Price Index (CPI) and Wholesale Price Index (WPI) data for October this week. Retail inflation for the month October eased to 3.31 per cent, while wholesale prices rose to a four-month high of 5.28 per cent, mainly due to spike in fuel prices.
RBI, in the fifth bi-monthly monetary policy statement, on Wednesday lowered expected inflation in the range of 2.7-3.2 per cent for the second half of the current fiscal against its previous projected retail inflation to be around 3.9-4.5 per cent in the October-March period of 2018-19, citing softening of food inflation and collapse in oil prices.
Investors will also keep an eye on industrial production data for October which would gauge health of the Asia's third largest economy.
Rupee Volatility
Market sentiment at forex market is likely to be skittish this week as exit polls on Friday suggested that BJP risks losing power in two crucial states, Rajasthan and Madhya Pradesh. Rupee may see volatility for few trading sessions until data on macro-economic indicator released later this week.
Global Cues
All eyes will be on the trade truce between the US and China, which may aggravate an already tense relation between the two nations, following the arrest of Huawei CFO Meng Wanzhou. Adding to it, investors will also focus on Britain's Brexit as the British Parliament will vote on Tuesday, which may affect equity market across the globe.
Crude Price Movement
Investors may react to crude price movement after the Organisation of Petroleum Exporting Countries (OPEC) and Russia decided to cut oil production from January by 0.8 million barrels per day from October levels, which is likely to push up oil prices and that could be negative for the market.
Edited by Chitranjan Kumar