GDP data, auto sales among key factors that may guide markets this week

In the coming week, the market expects the release of key economic data such as Q1 GDP growth rate and Manufacturing & Service PMI. The Q1 GDP is expected to show a sharp growth owing to a low base and recovery in economic activities towards the end of the quarter. Two IPOs will also keep the primary market buzzing.

Here are key factors that may guide the markets:

GDP data
Early this week, India will release its official GDP growth rate numbers for June quarter. Analysts are expecting it to be close to 20 per cent, which will be largely due to the low base of previous year. But any deviation from expectation can get a reaction from markets.

Auto sales data
Automobile companies will start releasing their monthly sales data for August during the next week. With the situation improving and most of the country now out of restriction, the growth will be watched by investors. The numbers will also highlight how much the chip shortage is hampering production of vehicles.

PMI data
Market participants will also await the Purchasing Managers’ Index (PMI), which will reflect on the demand conditions at the factory level. Consensus estimates show Markit Services data will indicate a contraction while Markit Manufacturing data will show an expansion of demand.

Two IPOs

Two initial public issues are scheduled to open next week. Specialty chemical company Ami Organics, and diagnostic chain operator Vijaya Diagnostic Centre try to raise Rs 2,465 crore during September 1-3.

FII flows

Despite benchmark indices scaling fresh highs, foreign investment flows have been dismal during the month. Till last week, the foreign portfolio investment in August came in at a mere Rs 986 crore. If FPI investment in the primary market is excluded, total FPI investment for August will be negative.

“FPI flow is likely to be influenced by the Fed commentary. Even then they are unlikely to commit big fresh money at these stretched valuations,” said VK Vijayakumar, Chief Investment Strategist at Geojit financial services.

Tech view

Nifty50 closed on a positive note for the week but continued to trade within the previous week’s range. On daily time frame, it has been making a series of spinning top and hanging man candlestick patterns which are signs of indecisiveness.

“A mild dip towards short-term averages can be expected but the major bullish trend will be intact as long as Nifty trades above 16,250 levels. Any break below 16,360 support levels will signal weakness in the short term,” said Samco Research.