US Dollar Inflation Index: 5 Factors That May Affect The Stock Market Next Week

Stock market next week: Last week was another one that belonged entirely to the bulls. In the five trading sessions of the past week, the bears struggled to make their presence felt on Dalal Street, but each time the bulls managed to recover. As a result, the magnitude of the weekly rise was small, but the direction remained positive.

“The Nifty 50 index rose over 1 percent (1.39 percent to be exact) to close near the 17,400 mark. The weekly line chart of Nifty has now confirmed a break of the trend line at the decline and this indicates a possibility of further increase towards 17600 to 17800. However, if we look at the daily chart, we can see narrow range bodies in all trading sessions due to the stretch and pulls and pulls between the bulls and the bears, suggesting that the market is indecisive and taking a breather or there may be exhaustion.”

Here we list the top 5 triggers that can determine the stock market next week:

1]US inflation data: “US inflation data will drive the direction of global markets in the coming weeks. If the numbers are worse than expected, we could see volatility as the US FED will continue to be falsified. Conversely, the inflation eases in the US. We could see confirmation that relief will come in the second half of the market,” said Sonam Srivastava, founder of Wright Research.

2]Dollar Index: “The dollar index has recovered from its 105 support levels which will pressure global equity markets. The fresh buying of the US dollar may erase the pressure created by the European Central Bank, the Bank of England and other central banks on the US currency.” said Anuj Gupta, vice president of research at IIFL Securities.

3]US China Taiwan Problem: “While the conflict between Ukraine and Russia remains a major cause of concern for the world, new tensions between the US, China and Taiwan have also raised concerns for the market. Therefore, progress in both geopolitical crises will be a major trigger for the market,” said Sonam Srivastava of Wright Research.

4]Purchase of FII: FII has surprisingly turned buyers in August, with many expecting the FII sell-off to end and buying to start hitting the markets. Of course, FII buying will depend on US inflation and other global data, but FII buying patterns will be more important to watch.

5]US Fed speeches: “We have speeches from two key Fed officials lined up next week that will shed light on the path of monetary policy going forward. Any hawkish hints from Fed officials in this speech could lead to further buying in the US dollar leading to to FII selling in Indian Stock Markets,” said Anuj Gupta of IIFL Securities.

Disclaimer: The above opinions and recommendations are those of individual analysts or brokerage firms, and not of Mint.

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