Mumbai, Sep 30 : The Reserve Bank of India (RBI)'s monetary policy review along with release of key macro data points and concerns regarding the stability of the NBFC segment will influence the trends on key equity indices next week.
According to analysts, high crude oil prices and directional flows of foreign funds will be the other major themes for the market's movement.
"RBI policy meet next week is the key event; market is pricing a 25 bps (basis points) rate hike," said Vinod Nair, Head of Research at Geojit Financial Services.
D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, said steady fund outflows, ongoing global trade war concerns and surging oil prices are putting pressure on the domestic currency and therefore, "it is expected that RBI may raise interest rates in early October, despite relatively tame inflation".
According to Nair, investors are yet to gain confidence due to lack of liquidity, margin funding and short selling in the market. Weak sentiment is likely to extend till the financial market stabilises, he added.
Along with the central bank's monetary policy, the market would also take cues from the Purchasing Managers' Index for September due in the week.
On the technical front, Nifty50 on the National Stock Exchange is likely to receive support at 10,850 points, said Deepak Jasani, Head of Retail Research at HDFC Securities, adding that immediate resistance is seen at 11,050 points.
In the week gone by, the Nifty50 closed at 10,930.45 points on Friday, down 212.65 points or 1.91 per cent from the previous week's close.
Similarly, the Sensex closed at 36,227.14 points, lower 614.46 points or 1.67 per cent from its previous weekly close.
In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 3,713.09 crore, while the domestic institutional investors bought Rs 8,437.32 crore worth of stocks during the week.
According to National Securities Depository (NSDL) figures, foreign portfolio investors (FPIs) divested Rs 511.65 crore, or $68.82 million, in the equities segment during the week ended September 28.
On the currency front, the Indian rupee closed at 72.48 a US dollar on Friday, 28 paise weaker from the previous week's close of 72.20.
In the coming week, the rupee is expected to be within a range of 72-73 per US dollar, said Anindya Banerjee, Deputy Vice President for Currency and Interest Rates, Kotak Securities.
He further said that heavy RBI intervention would continue to keep the rupee steady in spite of the massive foreign fund outflows from the equity and debt markets.
"Next week markets will keep a close watch on developments related to IL&FS, as any development related to it impacts the stock markets and in turn the rupee," Banerjee said.
(Rituraj Baruah can be contacted at firstname.lastname@example.org)