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HomeWeekly newsWeek Ahead Analysis: Q4 earnings, China GDP, oil prices Drive Market Sentiment.

Week Ahead Analysis: Q4 earnings, China GDP, oil prices Drive Market Sentiment.

Week Ahead:- The market is expected to be volatile in the upcoming week, with major focus on March FY24 quarter earnings, geopolitical tensions, China GDP data, and general elections.

The market closed flat in the week ended April 12, with benchmark indices hitting new highs. However, selling pressure on Friday erased gains due to rising uncertainty over Fed funds rate cuts, higher-than-expected US inflation, and escalating oil prices.

Experts predict a volatile week with major focus on March FY24 quarter earnings, geopolitical tensions, China GDP data, and general elections. The BSE Sensex fell 3.32 points, while the Nifty 50 gained 5.7 points.

Swastika Investmart’s Santosh Meena predicts macroeconomic factors like China’s GDP, US retail sales, bond yields, and dollar index will significantly influence market sentiment.

Key factors for upcoming week

Fourth-quarter FY24 earnings

Next week, domestic indications like quarterly earnings season will be emphasized.

Last Friday, TCS, the country’s largest IT services exporter, reported better-than-expected results to start the March quarter earnings season. Next week, 63 firms, including Infosys, HDFC Bank, Bajaj Auto, HDFC Life Insurance, HDFC Asset Management, and Wipro, will disclose their quarterly results scorecards.

Next week, Jio Financial Services, Angel One, ICICI Lombard General Insurance, CRISIL, Tata Communications, ICICI Securities, and Persistent Systems will report numbers. Thus, stock-specific activity will increase.

General Elections

The long-awaited Lok Sabha elections begin next week on April 19. Elections begin with 102 constituencies in 21 states and union territories.

A new opinion poll suggests the Bharatiya Janata Party-led administration will serve a third term at the Centre.

Domestic Economic Data

Domestically, market players will focus on the first-week April monetary policy meeting minutes, issued on Friday, April 19. The Monetary Policy Committee maintained the repo rate at 6.5 percent for the seventh straight meeting in April.

On April 15, WPI inflation for March will be revealed, and on April 19, bank loan and deposit growth for the week ended April 5 and foreign currency reserves for the week ending April 12.

Global Economic Data

China’s first-quarter GDP results will be watched worldwide. After 5.2 percent growth in Q4 of 2023, most experts predict the world’s second largest economy to increase 5 percent in March.

March US retail sales, employment, and European, UK, and Japanese inflation figures will also be examined.

Next week’s Fed speeches by Logan, Daly, Mester, Bostic, and Goolsbee will be watched.Global Conflicts and Oil Prices

Iran’s Saturday seizure of an Israeli-linked cargo ship in the Strait of Hormuz raised fears about rising tensions between Iran and Israel, making the following week vital for the market. US President Joe Biden said Friday that he expects Iran to attack Israel soon and that the US will protect Israel if it does, CNBC reported.

Thus, the market will constantly track oil prices, which are often affected by geopolitical events. As a net oil importer, India’s budget deficit and inflation rise with price rises.

International oil benchmark Brent crude prices fell 0.79 percent to $90.45 a barrel last week.

FII View

Foreign institutional investors sold about Rs 8,000 crore of shares last Friday and over Rs 6,500 crore this week, bringing the cash segment’s net outflow to Rs 10,362 crore this month. Given escalating geopolitical tensions, worries of India-Mauritius tax treaty revisions, and high US bond rates, experts expect FII outflows to continue, although local institutional investors will absorb most of them.

DIIs acquired Rs 12,233 crore in equities last week.

Last Friday, 10-year US bond rates were 4.53 percent, up from 4.4 percent the week before, while the US dollar index rose to 106.01, up from 104.30.

IPO

There will be no new mainboard IPOs in the primary market, but Vodafone Idea has launched its Rs 18,000 crore follow-on public offer (FPO), which will open on April 18 and finish on April 22. The offering price band is Rs 10-11 per share.

The Rs 50.3-crore Ramdevbaba Solvent public issue and the Rs 16.5-crore Grill Splendour Services IPO will float next week in the SME market.

The NSE Emerge will introduce DCG Wires & Cables and Teerth Gopicon on April 16, while Greenhitech Ventures will conclude its first public offering.

Technical View

Technically, analysts recommended prudence given uncertain global market circumstances, but the Nifty 50 held 22,500 after Friday’s sell-off. Experts predict the index to breach 22,300-22,200 next week, dragging it towards 22,000, and any upmove is probable only above 22,800, where it found resistance last week.

“With weak technical indicators, the Nifty may consolidate,” said SBI Securities head of technical & derivative research Sudeep Shah.

Since 22,200-22,300 is the 50% Fibonacci retracement level of its previous upward rise (21,710-22,775), he believes it will provide significant support for the index.

F&O Signals

Weekly options data suggests 22,200-22,000 may be critical support in the coming days, while 22,600-22,700 may be resistance for the Nifty 50.

Call open interest peaked at 22,700 strike, followed by 23,000 strike, with considerable Call writing between 22,700 and 22,600 strike. On the Put side, the 22,200 strike had the most open interest, followed by the 22,000 strike with identical writing at similar strikes.

Lower volatility appears to be comforting bulls. India VIX, the fear indicator, rose 1.7 percent to 11.53 levels this week after falling 11.65 percent the week before, but analysts expect volatility to rise as the market near the first round of general elections.

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