Stock Market

Week ahead: US Fed meet key; ICICI Pru public issue opens on Mon

Chillicious Bureau

The market snapped its two-week winning streak due to Monday’s heavy sell-off on account of uncertainty over central banks’ move and profit booking, though it recouped some losses amid consolidation in later part of the week. The Nifty failed to hold 8800 level touched in last session of the truncated week, down nearly 1 percent and the Sensex lost 0.7 percent for the week.

Last trading session of the week was quite volatile. The Sensex halved its gains in late trade to 186 points from 365 points as investors opted for profit booking in a cautious move ahead of crucial event next week – Federal Reserve’s two-day policy meeting that will start on September 20.

Some Federal Reserve officials’ statements last week raised rate hike expectations but that rate hike expectations diminished after the recent weaker-than-expected data points. Now globally investors will closely watch Fed chairperson Janet Yellen’s commentary for further rate hike.

Investors are now increasingly focusing on what the US central bank will do in 2017 rather than in its upcoming September or December meets, Robert Parker of Credit Suisse said in an interview with CNBC-TV18. 

He noted Janet Yellen’s recent comment that the Fed targets zero real Fed funds rate means rates could be even closer to 2 percent by end of 2017 or early 2018 instead of anticipated 50 basis points. This is negative for global markets in the longer term, he added.

Adrian Mowat of JP Morgan expects the Fed to raise rates in December rather than September. “If we look at the interbank market in the United States, it is already pricing about 45 basis points (bps) of Fed moves. So the currency market is already reflecting this. So I would like the Fed to move more and that is very good for risk assets,” he said.

Bank of Japan (BoJ) will also begin its two-day policy meeting on September 20.

On home turf, rate cut expectations started building up after sharp fall in retail inflation to 5.05 percent in August (from 6.07 percent in July) and contraction in July factory data.

The market will closely watch FIIs inflow that was volatile during the week ahead of Fed meet. They net bought around Rs 50 crore worth of shares in the week gone by compared with Rs 1,754 crore worth of buying in previous week.

In corporate action, JMT Auto (on September 21) and Rollatainers (on September 22) price will adjust for sub-division of face value of shares from Rs 2 to Re 1 while Mandhana Industries shares will start trading ex-demerger on September 22 as its retail division demerged into Mandhana Retail Ventures.

Companies that will have board meetings next week are:

> Hindustan Foods to consider fund raising on September 19

> Karur Vysya Bank to consider sub-division of shares on September 19

> Atishay to consider allotment of bonus shares on September 20

> Ankit Metal & Rohit Ferro to consider quarterly results on September 20

> Den Networks to approve preferential issue on September 20

> Rohit Ferro to consider quarterly results on September 20

Primary market will also remain active as largest private insurance company ICICI Prudential Life’s Rs 6,057 crore IPO, the biggest public issue in last six years, will open for subscription on September 19. Electric equipment maker HPL Electric’s Rs 361-crore public issue will also hit capital markets on September 22. Rear axle shafts manufacturer GNA Axles is likely to list its equity shares on September 23.

State-run manganese ore producer MOIL’s buyback offer up to Rs 863.3 crore and iron ore producer NMDC’s Rs 7527.75 crore will open on September 19.