FPIs flow

Foreign investors have injected ₹8,638 crore into the Indian equities so far this month despite high volatility in the market. In the previous month, foreign portfolio investments (FPIs) had touched a record high of ₹51,200 crore, from ₹5,000 crore in July, after net fund outflows of a massive ₹2.46 lakh crore between October 2021 till June 2022. However, weekly data showed that foreign investors turned jittery and emerged as net sellers during the week ended September 23 as a rise in the US 10-year bond yield and a strong dollar index influenced FIIs to exit emerging markets.

Rupee movement

The Indian rupee breached the 81-mark against the U.S. dollar intraday on Friday amid strong demand for the greenback after the rate hike by the Federal Reserve. The rupee closed at 80.99 per dollar on Friday after hitting a record low of 81.2250 during the session before the Reserve Bank of India likely intervened to defend the currency. The domestic currency registered its worst week loss since April last year by slipping as much as 1.6% during the said period.

The fall comes in the backdrop of a record rise in the US dollar, which hit a two-decade high in overnight trade, after the U.S. central bank on Wednesday raised key interest rates by 75 basis points (bps) for the third straight time, taking the policy rate to 3-3.25%. Heightened geopolitical risk due to Russia's war in Ukraine has also dampened investors' risk appetite. Other factors that caused the rupee to fall are firm crude oil prices, the muted trend in domestic markets and the solid performance of the USD against other major currencies like the Euro, Pound, and Yen.

September F&O expiry

The monthly Futures and Options (F&O) contracts expiry may inject volatility in the market. Investors will settle their contracts before the expiry date, i.e. September 29. Futures contracts expire on the last Thursday of the expiry month.

Global cues

On the global front, key economic data such as the U.S. GDP figures for the June quarter and Japan’s economic data will be closely eyed. The domestic market will be guided by the trend in the global equities, which witnessed sharp volatility last week after the U.S. the Federal Reserve on Wednesday hiked interest rates and took a hawkish stance to fight inflation.

Global cues

From RBI policy to U.S. GDP data: Five factors that will impact trade this week