Weekly forecast - What to expect from the markets this week?

29 Aug 2022 , 09:28 AM

Indian equity markets are likely to see a turbulent week. Federal Reserve Chairman Jerome Powell gave the hawkish statement on Friday that the US Federal Reserve will go all out to control rising inflation even if it meant a prolonged period of economic slowdown. This implied that the Federal Reserve is very likely to go for severe interest rate hikes in the coming months.

Interest rate hikes in the US are a negative factor for Indian markets. It will result in appreciation of dollar and increase in required rate of return of FPIs. FPIs may therefore start pulling money out of the Indian markets. On Friday, FPIs turned net sellers after being net buyers for many of the past days.

The economic damage caused by Covid lockdowns has also started coming in full light now. According to revised data, UK’s economy shrank by 11% in 2020. This is the highest level of contraction that the country’s economy has seen since 1709. On the positive side, the expected declines in the Indian equity markets this week may be a good time for investors with long term horizon to buy stocks at cheaper valuations. On the technical front, Nifty 50 is likely to see support at 17320 and resistance at 17850. 

A BUY call is being given on the stock of NTPC, for this week. Target price is Rs172. Stop loss is Rs158.

A BUY call is also being given on the stock of Crompton, for this week. Target price is Rs442. Stop Loss is Rs400.