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RBI policy review, Burger King IPO & auto sales among factors that will sway market this week

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NEW DELHI: Domestic stocks advanced last week on strong foreign inflows amid the beginning of transition to Biden administration in the US. The gains were, however, capped due to weak economic data globally, including a rise in jobless claims in the US, and doubts over AstraZeneca’s vaccine efficacy.

For the week, the Sensex rose 267.47 points or 0.60 per cent, while the Nifty added 109.90 points or 0.85 per cent.

This truncated week will see the release of auto sales data and PMI readings, the kick start of Burger King IPO, RBI‘s policy review, OPEC’s virtual meet and investors’ reaction to India slipping into recession. Investors would also keep an eye on vaccine development. The market would be shut on Monday on account of Gurunanak Jayanti. Here’s what investors would watch out for next week:

Reaction to GDP numbers: Tuesday would see investors reacting to GDP numbers, which showed that the economy shrank 7.5 per cent in the September quarter and thus, technically entered into a recession. The economy contracted 23.9 per cent in the June quarter. That said, the latest numbers are somewhat better than Street expectations. Nomura India has, in fact, revised upward its 2020 GDP growth forecast to -7.1 per cent against -9 per cent earlier, and FY21 estimate to -8.2 per cent from -10.8 per cent.

Burger King IPO: Burger King India is all set to open its initial public offer (IPO) on Wednesday, December 2. The Rs 810 crore offer would comprise of Rs 450 crore of fresh issue and offer for sale of up to 6 crore equity shares by promoter and would be sold in Rs 59-60 price range. At the upper price band, OFS is valued at Rs 360 crore.

Auto sales data: Auto sales volume data for November will be out in the first week of December. Emkay Global, in a note, said wholesale growth should be robust for tractors, two-wheelers and car makers, supported by healthy retails and a favorable base. In two-wheelers and personal vehicle segments, the base was low due to the timing of the festive season. In tractors, channel filling is also expected to aid growth, it said. The domestic commercial vehicle industry volumes are expected to stay muted.

OPEC meet: OPEC members and its allies will hold a virtual meeting on Monday and Tuesday to finalise an expected extension to production cuts as the coronavirus pandemic continues to weigh on global demand.

The meeting comes as the oil industry hopes to turn a page on a disastrous year which saw the cartel forced to adopt drastic cuts in response to the cratering of demand caused by the pandemic, AFP reported. The report suggested that the member states want to avoid a repeat of the collapse in prices seen in April.

RBI policy review: RBI’s MPC will review its money policy on December 2-4. The central bank is best served by maintaining the policy approach outlined in the October statement, even as it likely acknowledges some optimistic turn in growth indicators and sticky inflation, investment banker Barclays said last week.

“We expect the RBI’s monetary policy committee to keep rates steady, even though we expect its inflation and growth forecasts to be revised higher,” Barclays said in its research report on emerging markets.

Meanwhile, this week will also see release of PMI readings in India, and the world over.

Vaccine development: Developments over vaccine will be keenly followed this week, after Serum Institute of India (SII) on Saturday said it is in the process of applying for an emergency use licensure for AstraZeneca-Oxford’s COVID-19 vaccine candidate in India in the next two weeks.

Addressing a virtual press conference on the visit of Prime Minister Narendra Modi to the company’s Pune facility, Serum Institute of India CEO Adar Poonawalla said: “We discussed the plan, the implementation plan which will happen only after the emergency use licensure, that is granted based on the data that will have to be submitted. We are in the process of submitting that officially to the drug controller of India”.

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