Inflation data, Q4 results, global cues to guide market direction this week
Indian stock market traded volatile in the first week of the new financial year but managed to end on a positive note. Weak global cues continue to weigh on the sentiment however, buying in select heavyweights across sectors not only capped the damage but also helped the index to close in the green. Domestic equity benchmarks Nifty 50 and Sensex extended their winning streak and logged a third straight week of gains, with the onset of FY25.
Nifty 50 clocked an all-time high of 22,619 and ended the week above the 22,500 mark with a decent gain of 0.84 per cent. The 30-share BSE Sensex rose 596.87 or 0.81 per cent to finish at 74,248.22 and touched a record high of 74,501.73. Mostly key sectors traded in sync with the move and edged higher wherein metal, realty and banking were among the top gainers.
The highlight of the week was the outperformance of the broader indices with the midcap index claimed its record high at 50,000, recording its biggest weekly gain in seven months, while the smallcap index gained over seven per cent.
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unveiled the first policy decision for FY25 and decided to keep the interest rate unchanged for the seventh time at 6.5 per cent, in line with D-Street estimates.
Financial services, the highest weighted sub-index, gained 2.70 per cent this week, its best in four months, led by a rise in top private lender HDFC Bank after it posted a sequential growth in deposits in the March quarter. HDFC Bank gained 7.02 per cent this week, its best since November 2022.
Vinod Nair, Head of Research, Geojit Financial Services said, ‘’Towards the end of the week, volatility rose due to a surge in US bond yields and crude oil prices, along with escalating geopolitical tensions. Despite the RBI’s policy meeting aligning with expectations, concerns surrounding food inflation and alerts of a heat wave tempered market sentiment.”
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‘’The auto sector anticipates positive results in Q4 due to volume growth in the premium segment and higher price realisation. While weakness in the commercial vehicle and tractor segment continues owing to high base and lower reservoir level. However, the ongoing correction trend in the IT sector, influenced by global uncertainties, is anticipated to persist in the medium term, particularly with muted quarterly expectations,” added Nair.
Moving ahead, some major listings are slated across the mainboard small-and-medium enterprises (SME) segment in the primary market this week. Some new initial public offerings (IPO) across SME segments will open for subscription. The week will be critical from domestic and technical point of view as investors will eye economic indicators and the corporate results.
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Overall, analysts expect Nifty 50 to be in a consolidation phase with a prevailing bullish bias around 22,500. Experts advise traders to continue with ‘buy on dips’ approach until Nifty 50 breaks 22,200 and also suggest to focus on stock selection and not getting carried away with the recovery in broader indices.
Here are the key triggers for stock markets in the coming week:
Domestic Macroeconomic Data, Q3 Results:
Indian companies are set to enter the new corporate earnings Q4fy24 season this week. Leading the pack is information technology (IT) services giant Tata Consultancy Services (TCS), set to kick off the earnings season for the quarter ending March 2024. TCS Q4 results for the fourth quarter of FY24 will be announced on Friday, April 12, 2024, aftermarket trading hours.
Investors will also keenly eye macroeconomic data this week as India’s consumer price index (CPI)-based inflation or retail inflation rate for March 2024 and the index of industrial production (IIP) data for February are also scheduled to be released on April 12.
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3 new IPOs, 6 listings to hit D-Street
In the SME segment, DCG Cables & Wires IPO and Teerth Gopicon IPO will open for subscription on April 8. Greenhitech Ventures IPO will open for bidding on April 12, 2024.
Among listings, shares of Bharti Hexacom will debut on stock exchanges BSE, NSE on April 12. Additionally, on April 8, shares of Yash Optics & Lens and K2 Infragen will debut on NSE SME and shares of Jay Kailash Namkeen will debut on BSE SME. On April 9, shares of Aluwind Architectural and Creative Graphics Solutions India will get listed on NSE SME.
FII Activity
Foreign portfolio investors (FPIs) started the new fiscal 2024-25 (FY25) on a subdued note after emerging as net buyers in Indian equities and debt during FY24. FPIs pumped ₹2.04 lakh crore in Indian equities during FY24, which was the highest FPI inflow since FY21 when the total investment stood at ₹2.74 lakh crore, according to stock exchange data.
FPIs have sold ₹325 crore worth of Indian equities and the total inflow stands at ₹1,444 crore as of April 5, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. The total debt inflows stand at ₹1,215 crore this month so far.
“There have been big swings in US bond yields this year in response to expectations regarding rate cuts by the Fed. The year started with market discounting six rate cuts in 2024 and consequently the yields drifted down. Then the market started factoring in only three rate cuts since the US labour market continued to be tight,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Also Read: FY24 Review: FPIs infused ₹2 lakh crore in Indian equities, highest since FY21; What lies ahead?
‘’Now many experts think that there may be only two rate cuts and these will be back loaded in 2024. Consequently the US 10-year yield has spiked to 4.4 per cent. This will impact FPI flows into India in the near term. However, FPI selling will be limited despite the high US bond yields since the Indian stock market is bullish and has been setting new records consistently. An important trend in FPI activity is the big selling in the FMCG segment and big buying in telecom and realty,” added Dr. V K Vijayakumar.
Foreign institutional investors (FIIs) were net sellers for four out of five sessions in Indian markets last week and the net outflow stands at ₹3,835.75 crore, while the inflows and outflows by domestic institutional investors (DIIs) counterbalanced each other last week, according to stock exchange data.
Global Cues
On the global front, the US market has shown some profit booking from higher levels due to heightened attention on the rising US bond yield, rising commodity prices (crude oil, gold, and silver), and also the geopolitical situation (the Iran-Israel proxy conflict and the Russia-Ukraine war). These factors will be closely monitored, as they have the potential to influence market sentiment, according to Santosh Meena, Head of Research, Swastika Investmart Ltd.
Additionally, the US will announce its inflation rate on April 10, 2024. The US non-farm payrolls and unemployment rate for March that were disclosed on April 5, 2024, and will play a significant role in shaping the market mood in the near term. The European Central Bank (ECB) will also unveil its interest rate decision in the coming week.
‘’The performance of the US markets, after the recent decline, will also be in focus and a close below 38,500 in the Dow Jones Industrial Average (DJIA) may prompt further fall. On the higher side, it would face stiff resistance around the 39,300-39,800 zone,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.
Oil Prices
International crude oil prices hit their six-month high mark in the previous session, reporting a second straight weekly gain, driven by the ongoing geopolitical conflicts in the Middle-East. Brent and US West Texas Intermediate (WTI) crude oil benchmarks last rose more than $1 per barrel with Brent settling at $91.17 per barrel, up 52 cents, or 0.57 per cent.
US WTI crude closed at $86.91 a barrel. Both benchmarks notched more than four per cent gains last week after Iran, vowed revenge against Israel for an attack. Last week, the Organization of the Petroleum Exporting Countries and allies (OPEC+) kept its oil supply policy unchanged and pressed some countries to increase their respective compliance with the targeted output cuts.
Corporate Action
In the second week of the new fiscal 2024-25 (FY25), Shares of several companies such as Vesuvius India, Sun TV Network, Goodluck India Ltd, DCM Shriram Industries, among others will trade ex-dividend, starting from Monday, April 8. Along with these, some other firms will also trade ex-split, ex-rights, and ex-bonus, according to data on the BSE. Check full list here
Technical View
Nifty 50 is currently in a consolidation phase, hovering around the 22,500 mark with a prevailing bullish bias, according to Swastika Investmarts’ Santosh Meena. Religare Brokings’ Ajit Mishra said, ‘’We are currently seeing time-wise correction in Nifty around its record high and it is healthy amid weak global cues. Traders should continue with a “buy on dips” approach until Nifty breaks 22,200.”
‘’On the higher side, it can gradually inch towards the 22,700-22,850 zone. Meanwhile, participants should maintain their focus on the selection of stocks and suggest not to get carried away with the recovery in broader indices and stick only with the quality names,” added Mishra.
According to Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd, the support is expected around the 22,400-22,300 range. ’’The near-term trajectory of the Nifty remains positive, and the current range-bound movement suggests the potential for significant swings in either direction,” said Nanda.
‘’This market behavior indicates a tightening range near record highs. It would be prudent to monitor for a range expansion around the 22,600 and 22,300 levels on both ends”, added the analyst.
Bank Nifty exhibits notable strength, marked by a breakout from a bullish cup and handle formation, signaling potential upward momentum towards the coveted 50,000 level, according to Santosh Meena.
‘’Looking ahead, we anticipate encountering an immediate obstacle at 48,650. However, should we surpass this level, the upward momentum is expected to persist, potentially reaching up to 49,400. It’s noteworthy that the range between 47,800 and 47,500 holds paramount importance as a crucial support zone in the near term,” said Arvinder Singh Nanda.
Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 07 Apr 2024, 06:11 AM IST
