Week Ahead:- Experts predict a positive market consolidation in the upcoming week, influenced by Fed interest rate decisions, corporate earnings, monthly auto sales, and manufacturing PMI data.
The market experienced relief in the week ending April 26, but gains were capped due to selling pressure and lower-than-expected Q1-CY23 US GDP. The Nifty 50 gained over 1%, despite a mixed March quarter earnings season.
The market is expected to consolidate positively in the upcoming week, with focus on Fed’s interest rate decision, corporate earnings, auto sales, and manufacturing PMI data. Stock-specific action is expected due to earnings season.
Markets will react to ICICI Bank, Maruti Suzuki, and HCL Technologies’ quarterly results, with consolidation expected. Geojit Financial Services Research predicts bond and gold investors will seek refuge. Markets will remain closed on Maharashtra Day.
Key factors for upcoming week
FOMC meet
Globally, all eyes will be on the result of the two-day Federal Open Market Committee (FOMC) meeting on May 1. Market analysts and economists predict no change in the Fed funds rate of 5.25-5.50 percent, and attention will be on the comments by Fed Chair Jerome Powell.
In the discussion, experts will search for signs that the Fed will drop its benchmark interest rate. The Personal Consumption Expenditure (PCE) index, an inflation indicator, rose to 3.4 percent in Q1 (against 1.8 percent in Q1), suggesting that the rate cut may occur in September rather than June. Experts now expect one or two rate decreases in 2024 instead of three.
Global economic data
Next week, the unemployment rate, non-farm payrolls, manufacturing and services PMI, JOLTs job openings and departures, and US factory orders data will be examined alongside corporate profits.
Manufacturing PMI from other developed and developing nations, Europe’s Q1CY23 GDP growth flash statistics, and the Bank of Japan’s monetary policy meeting minutes will also be followed.
Corporate Earnings
March quarter results, which are mixed, will be the focus at home. Next week, over 200 firms will report quarterly results, including Nifty 50 companies UltraTech Cement, Adani Enterprises, Adani Ports, Coal India, Britannia Industries, Titan Company, and Kotak Mahindra Bank.
During the week, Indus Towers, Indian Oil Corporation, Adani Power, Ambuja Cements, Avenue Supermarts, Tata Technologies, Jana Small Finance Bank, KPIT Technologies, PNB Housing Finance, Poonawalla Fincorp, Adani Energy Solutions, Exide Industries, Havells India, REC, Blue Star, Coforge, Dabur India, Federal Bank, Godrej Properties, JSW Infrastructure, and IDBI Bank will report quarterly earnings
Auto sales
Market players will watch April vehicle sales starting May 1. Brokerages predict double-digit increase in two-wheeler and passenger vehicle sales, but weak commercial vehicle sales and low tractor sales.
Domestic economic data
Final manufacturing PMI data, released on May 2, will also be monitored. Preliminary April HSBC Manufacturing PMI was 59.1.
On April 30, infrastructure production for March will be reported, and on May 3, bank loan and deposit growth for the week ended April 19 and foreign exchange reserves for the week ending April 26.
FII flows
Next week, FII activity will be monitored, although domestic institutional investors have bought equities markets throughout the week and month, more than offsetting FII outflow.
FIIs sold Rs 14,704 crore in cash shares last week, while DIIs acquired Rs 20,796 crore, according to preliminary data.
Though April has two more trading days, FIIs have net sold Rs 36,933 crore, the most since January 2023, while DIIs have net purchased Rs 42,065 crore.
IPOs
No new IPOs are expected in the mainboard category this week, although SME activity will continue.
The IPOs of Storage Technologies & Automation, Amkay Products, and Sai Swami Metals & Alloys will open on April 30 and end on May 3, while Slone Infosystems’ will open on May 3.
Varyaa Creations, Shivam Chemicals, and Emmforce Autotech will start trading on BSE SME on April 30, as will JNK India from the mainboard category.
Technical View
Technically, the Nifty 50 has produced a High Wave style of candlestick pattern on the weekly charts, signaling indecisiveness among bulls and bears over the next market movement. As long as the index retains 22,300, bulls may prevail. Friday’s Dark Cloud Cover candlestick pattern on the daily charts was a bearish reversal trend, but analysts noted the index defended the 10-week EMA (22,222), which may be its next support.
Experts say 22,700-22,800 levels are possible if the index reclaims and maintains 22,500 for a few days.
The Nifty is currently in a rising channel pattern, indicating potential bullish momentum if it stays above 22,300 in the coming week. The target range is 22,750-22,800, according to Jigar Patel, Senior Manager, Equity Research, Anand Rathi Financial Services. He warned that a break of 22,300 support might increase market selling pressure.
F&O signals
Jigar also notes that FIIs have a 39 percent long-short ratio, limiting downside risk.
Weekly options data showed that the Nifty may confront a barrier around 22,500 on the higher side, and persistence over the same may push the index to the much-anticipated 23,000 level, while 22,000 is predicted to be a major support in the coming sessions
highest Call open interest was at 23,500 strike, followed by 22,500 and 23,000 strikes, while highest Call writing was at 23,000 strike, 23,200, and 22,500 strikes. The 21,500 strike had the most open interest, followed by 22,000 and 22,500 strikes, with maximum Put writing at 21,800, 22,200, and 22,000 strikes.
While the India VIX, the fear index, plunged 18.82 percent last week to 10.93, the lowest level since November 2023, bulls felt more secure.
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