Week Ahead:-Experts predict a positive market consolidation in the coming week, influenced by corporate earnings, Lok Sabha elections, UK GDP, and Bank of England policy meeting.
The market remained upward in the week ending May 3, supported by earnings, oil prices, and auto sales. However, concerns about inflation, volatility, and FII selling limited the upside. The market is expected to consolidate positively from May 6.
Market participants will react to lower-than-expected non-farm payrolls data, rising US unemployment, and quarterly earnings from Kotak Mahindra Bank. The Nifty 50 and BSE Sensex rose, while broader markets were mixed. Investors may need to align portfolios and remain vigilant about BoE policy and UK GDP data.
Key factors for upcoming week
Corporate Earnings
Market players will continue to focus on the March quarter results season, which is entering its fifth week and has met analysts’ forecasts. Over 300 firms will report quarterly profits, including Dr Reddy’s Laboratories, Hero MotoCorp, Larsen & Toubro, Asian Paints, State Bank of India, Cipla, Eicher Motors, and Tata Motors.
Lupin, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Union Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Indian Bank, Canara Bank, ABB India, Tata Power, TVS Motor, Escorts Kubota, Marico, PB Fintech, Godrej Consumer Products, JSW Energy, Voltas, Bharat Forge, and Alembic Pharmaceuticals will also report earnings next week.
Lok Sabha elections
Following a reduced voter participation in phases 1 and 2 (66.14 and 66.71 percent, respectively) compared to 69.53 and 69.50 percent in the 2019 elections, the street will closely monitor the third round of voting next week, on May 7.
In the third phase, 96 LS seats from 12 states—Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Uttar Pradesh, and West Bengal—will vote.
Global economic data
Investors worldwide will watch the BoE’s policy announcement on May 9 and UK Q124 GDP projections on the same day.
WEAK GDP and dropping inflation in the UK make a policy move possible, but analysts say MPC (Monetary Policy Committee) policymakers are split on when to lower rates for the first time in four years. The UK’s economy entered a technical recession in the last quarter (October-December 2023) with GDP falling 0.3 percent, compared to 0.1 percent in Q32023. Consumer price inflation was 3.2 percent in March and is expected to fall further in April.
In addition, weekly US jobs data, April services PMI figures from Europe, Japan, and China, and April inflation & PPI data from China will be examined.
FOMC (Federal Open Market Committee) remarks will also be scrutinized for Fed interest rate indications.
Domestic economic data
Domestically, market investors will focus on the April HSBC Services PMI (final) statistics coming May 6. Services PMI rose to 61.2 in March from 60.6, and economists predict it to rise higher in April.
Next week, May 10, foreign currency reserves for the week ending May 3 and March industrial output data will be announced. Industrial production rose to 5.7% in February from 3.8% in January.
F/DII Data
The Street will scrutinize international institutional investors (FIIs) as well as domestic institutional investors (DIIs).
FIIs sold Rs 2,115 crore in cash stocks last week, while DIIs acquired Rs 4,164 crore. Thus, DII equities market inflows outpaced FII withdrawals for another week. FIIs sold Rs 14,704 crore in equities and DIIs acquired Rs 20,796 crore last week.
“US bond rates will influence FIIs most. Geojit Financial Services Chief Investment Strategist V K Vijayakumar said aggressive buyers will emerge if US bond yields fall and the Indian economy and markets perform well.
The US dollar index decreased from 105.94 to 105.08 WoW, while the 10-year treasury yield fell from 4.67 to 4.52 percent.
The technical view
The market appears to be consolidating, with Nifty 50 resistance around 22,800 and immediate support at 22,300 for the week. The index developed a Bearish Engulfing candlestick pattern on the daily charts, signaling a bearish reversal, and a Doji pattern on the weekly charts, showing hesitation. If the index clearly breaks 22,800, analysts recommend watching 22,950-23,000, the upper limit of the ascending channel.
“If the Nifty 50 stays above 22,300, it may rise to 22,700-22,800 levels after consolidation. “A break below 22,300 could lead to a drop to 22,000,” said Master Capital Services Senior Vice President Arvinder Singh Nanda.
F&O signals
Weekly options data predicted Nifty 50 resistance at 22,700-22,800 and support at 22,000. It suggests the 22,000 mark will be key for additional fall.
Call side open interest was highest at 22,800 strike, followed by 23,000 and 22,700 strikes, and writing was highest at 22,800 strike, 22,500, and 23,000. Put side open interest was highest at 22,000 strike, followed by 21,800 and 22,500 strikes, with maximum writing at 22,000 strike, 21,900 and 22,100 strikes.
Indian VIX
The bulls were uneasy when volatility rose for the sixth straight week after plunging almost 20% on April 23. After facing resistance numerous times in January and February this month, 16.5 is the key level to monitor.
India VIX, the fear indicator, rose 33.8 percent to 14.62, its highest closing level since March.
IPOs
Next week, Dalal Street will see nine IPOs, including three mainboard ones. Indegene’s Rs 1,842-crore IPO will open on May 6 and finish on May 8, as will TBO Tek’s Rs 1,551-crore and Aadhar Housing Finance’s Rs 3,000-crore IPOs.
Winsol Engineers and Refractory Shapes’ IPOs will begin on May 6, while Finelistings Technologies and Silkflex Polymers (India)’s will start on May 7. On May 8 and 9, the TGIF Agribusiness and Energy-Mission Machineries IPOs will launch.
Storage Technologies and Automation, Sai Swami Metals & Alloys, and Amkay Products will launch on BSE SME on May 8, while Slone Infosystems shares will trade on NSE Emerge on May 10.
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