Q4 earnings, China GDP, oil prices among 10 key factors to keep traders busy next week
The market closed flat in the week ended April 12, as the benchmark indices started off the week on a positive note and hit a new high but the selling pressure on Friday wiped out those gains. Rising uncertainty over fed funds rate cut given higher-than-expected US inflation for March, increasing oil prices due to escalating tensions between Iran & Israel, and FII selling pressure weighed on the market sentiment.
In the coming truncated week, the market is expected to be volatile, with major focus on March FY24 quarter earnings, geopolitical tensions, China GDP data, and beginning of general elections, experts said. On Monday, the market will first react to TCS’ Q4 earnings and CPI inflation numbers for March (falling below 5 percent), which was released on Friday after market hours.
The BSE Sensex during the last week was down 3.32 points at 74,245, and the Nifty 50 gained 5.7 points at 22,519, while the broader markets outperformed benchmark indices, as the Nifty Midcap 100 index rose 0.09 percent and Smallcap 100 index jumped 0.86 percent.
“We expect markets to remain volatile in the near term given the global concerns and the start of an election next week,” Siddhartha Khemka, head – retail research at Motilal Oswal Financial Services said.
He further said with the onset of the earning season, the focus will shift more toward domestic cues along with macro data points, he feels.
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On the macroeconomic front, China’s GDP data, US retail sales figures, and movements in US bond yields and the dollar index will be important factors influencing market sentiment, Santosh Meena, head of research at Swastika Investmart said.
The market will remain shut on April 17 for Ram Navami.
Here are 10 key factors to watch:
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In the coming week, the more focus will be on the domestic cues including the quarterly earnings season.
TCS, the country’s largest IT services exporter, started off the March quarter earnings season on a positive note by reporting better-than-expected numbers last Friday. Over the course of the next week, 63 companies will release their quarterly earnings scorecard including prominent names like Infosys, HDFC Bank, Bajaj Auto, HDFC Life Insurance Company, HDFC Asset Management Company, and Wipro.
Among others, Jio Financial Services, Angel One, ICICI Lombard General Insurance Company, CRISIL, Angel One, Tata Communications, ICICI Securities, and Persistent Systems will also announce numbers next week. Hence, there will be more stock-specific action.
The much-awaited Lok Sabha polls will start next week, with the first phase taking place on April 19. A total of 102 constituencies in 21 states and union territories are included in the first phase of elections.
The recent opinion poll surveys indicate the Bharatiya Janata Party-led government is likely to be in power at the Centre for the third term.
Domestic Economic Data
On the domestic front, the market participants will also focus on the minutes of monetary policy meeting held in the first week of April, which will be released on Friday, April 19. The Monetary Policy Committee had left the repo rate unchanged at 6.5 percent in seventh consecutive meeting in April.
Further, the WPI inflation numbers for March will be announced on April 15, while bank loan and deposit growth for the fortnight ended April 5, and foreign exchange reserves for the week ended April 12, will be released on April 19.
Global Economic Data
On the global front, all eyes will be on China’s GDP numbers for the first quarter of the current calendar year. Most economists feel the world’s second largest economy is expected to maintain the 5 percent growth mark for the March quarter, against the 5.2 percent economic growth expansion it recorded in Q4 of 2023.
Further, the focus will also be on the US retail sales data for March and jobs data, as well as March inflation numbers by Europe, the United Kingdom, and Japan.
The speeches by several Fed officials including Logan, Daly, Mester, Bostic, and Goolsbee during the coming week will also be watched.
Geopolitical Tensions & Oil Prices
The next week will also be crucial for the market as fresh concerns about possible increasing tensions between Iran and Israel emerged, especially after Iranian troops on Saturday seized an Israeli-linked cargo ship in the Strait of Hormuz. Further, US President Joe Biden said on Friday that he expects Iran will strike Israel soon, and reiterated that the US would support and defend Israel if such an attack occurred, reports CNBC.
As a result, the market will also be closely monitoring the movement of oil prices, which are generally impacted by geopolitical events. India is the net oil importer, hence any spike in prices directly increases the fiscal deficit and inflation of the country.
Brent crude futures, the international oil benchmark, corrected 0.79 percent during the last week and settled at $90.45 a barrel.
Foreign institutional investors sold more than Rs 8,000 crore worth of shares last Friday and over Rs 6,500 crore shares during the week, taking the total current month’s net outflow to Rs 10,362 crore in the cash segment. Experts feel the FII outflow may continue in near term given the rising geopolitical tensions, fears of changes in India-Mauritius tax treaty, and elevated US bond yields, though largely FII selling will be absorbed by the domestic institutional investors’ money.
DIIs have net bought Rs 12,233 crore worth of shares in the last week.
The 10-year US bond yields settled at 4.53 percent last Friday, against 4.4 percent in previous week, while the US dollar index jumped to 106.01, up from 104.30 on week-on-week basis.
Meanwhile, in the primary market, there will be no fresh IPOs in the mainboard segment but Vodafone Idea has launched its Rs 18,000 crore follow-on public offer (FPO), which is scheduled to open on April 18 and close on April 22. The issue price band has been set at Rs 10-11 per share.
In the SME segment, there will be two IPO launches next week, with the Rs 50.3-crore Ramdevbaba Solvent public issue as well as the Rs 16.5-crore Grill Splendour Services IPO opening for subscription on April 15 till April 18.
Greenhitech Ventures will close its maiden public issue on April 16, while DCG Wires and Cables, and Teerth Gopicon will debut on the NSE Emerge on April 16.
Technical View
Technically, experts advised caution especially amid uncertain global market conditions, though the Nifty 50 managed to defend 22,500 after Friday’s sell-off. According to them, 22,300-22,200 zone is expected to act as a support for the index next week as breaking of the same can drag the index towards 22,000 mark, experts said, adding any upmove is likely to be possible only above 22,800 where it faced lot of resistance in the passing week.
“With the technical indicators displaying weakness, the Nifty may slide into the period of consolidation,” Sudeep Shah, head of technical & derivative research at SBI Securities said.
Talking about levels, he feels the zone of 22,200-22,300 will act as crucial support for the index as it is the 50 percent Fibonacci retracement level of its prior upward rally (21,710-22,775).
F&O Cues
The weekly options data indicating that 22,200-22,000 is expected to be key support area in the coming days, whereas the Nifty 50 may face resistance at 22,600-22,700 levels.
On the Call side, the maximum open interest was visible at 22,700 strike, followed by 23,000 strike, with meaningful Call writing at 22,700 strike, then 22,600 strike. While on the Put side, the 22,200 strike owned the maximum open interest, followed by the 22,000 strike with writing at similar strikes in similar sequence.
Meanwhile, the lower volatility seems to be putting the bulls in a comfortable position. India VIX, the fear gauge, rebounded 1.7 percent to settle at 11.53 levels during the week, after 11.65 percent fall in previous week, but experts see some increase in volatility as the market approaches the first phase of general elections.
Corporate Action
Here are key corporate actions taking place next week:
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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