Week Ahead:- The market is predicted to be consolidative in the upcoming week, with a positive bias.
The market experienced a significant recovery in the extended week ending May 18, with the benchmark index rising despite volatility. Factors such as better-than-expected earnings, positive global cues, and hope for a Fed rate cut supported the sentiment. The truncated week is expected to be consolidative with a positive bias, with experts focusing on FOMC minutes, speeches, Lok Sabha elections, and corporate earnings.
The Nifty 50 and BSE Sensex both rose by 2 percent, while the broader markets outperformed benchmark indices. Geojit Financial Services predicts continued volatility in the near term due to uncertainties surrounding election results and quarterly earnings.
Key factors for upcoming week
Corporate Earnings
Nearly 900 companies, including Oil and Natural Gas Corporation, Grasim Industries, Power Grid Corporation of India, Sun Pharmaceutical, ITC, Hindalco Industries, NTPC, and Divis Laboratories, will release their March quarter earnings in the seventh week.
Next week, Aurobindo Pharma, BHEL, Bharat Electronics, Bosch, Petronet LNG, InterGlobe Aviation, Ashok Leyland, Jubilant FoodWorks, One 97 Communications, FSN E-Commerce Ventures, Honasa Consumer, New India Assurance Company, India Cements, Oil India, SAIL, Gland Pharma, Glenmark Pharmaceuticals, Hindustan Copper, Manappuram Finance, Nazara Technologies, Suzlon Energy, and United Spirits will
Analysts say corporate profits so far are mostly in line with expectations, with no major surprises.
Lok Sabha Elections
Market participants will also monitor voter turnout in the final three phases of general elections. The voting began on April 19 and has been completed in four of seven phases. Next Monday, the Lok Sabha election will proceed to two phases. The fifth phase, on May 20, will involve 49 constituencies in 6 states and 2 union territories, while the sixth phase, on May 25, will involve 57 constituencies in 7 states and union territories.
According to the Election Commission, the cumulative voter turnout in the first four phases of the general elections was 66.95 percent. The first phase on April 19 had 66.14 percent turnout, the second on April 26 had 66.71 percent, the third on May 7 had 65.68 percent, and the fourth had 69.16 percent on May 13.
Domestic Economic Data
On May 23, HSBC Manufacturing and Services PMI Flash data will be announced. April Manufacturing PMI was 58.8 compared to 59.1 in March, while Services PMI was 60.8 compared to 61.2.
On May 24, foreign exchange reserves for the week ending May 17 will be announced.
FOMC Minutes, Powell Speech
Global attention will be on Federal Reserve Chair Jerome Powell’s speech on May 21 and the FOMC minutes on May 22. In last week’s address on May 14, Powell underlined that inflation has fallen slower than projected, signaling that benchmark interest rates may remain high for a while, but he does not expect the central bank to raise rates. US inflation rose to 3.4 percent in April 2024 from 3.5 percent in March, well above the Fed’s 2 percent objective.
The Fed maintained interest rates at 5.25-5.5 percent during the latest FOMC meeting for the sixth time. Thus, the minutes and speech will be watched for rate cut temporal indications.
Global Economic Data
Market players will also watch US jobs, new home sales, and durable goods orders, Eurozone and Japan Manufacturing and Services PMI flash reports, and April Japan inflation.
FID/DII Flow
Foreign institutional investors (FIIs) have been big sellers for yet another month (might be due to uncertainty around the election outcome, which has already increased volatility), but domestic institutional investors (DIIs) have continued to compensate by a large margin, driving equity markets.
Experts think FIIs may opt to wait until June 4 for general election results before investing again. The last week ended May 18 saw FIIs net sell Rs 10,650 crore worth of cash segment shares, bringing the total net selling for the month to Rs 33,625 crore (similar to the previous month). DIIs were net buyers, buying Rs 14,410 crore and Rs 33,820 crore, respectively.
IPO
On May 22, Awfis Space Solutions, the lone mainboard IPO (worth Rs 599 crore), will launch, followed by Go Digit General Insurance on May 23.
GSM Foils is the sole SME IPO on 24. In the following week, ABS Marine Services, Veritaas Advertising, Mandeep Auto Industries, Indian Emulsifier, Quest Laboratories, HOAC Foods India, and Rulka Electricals will list their shares.
HOAC Foods India and Rulka Electricals’ May 16 IPOs will close on May 21.
Technical View
Technically, the Nifty 50 reached 22,500, its highest closing level since May 2, which is expected to determine market direction in the coming months. Climbing above the level can take the index to record highs, while falling below it can drag it down to 22,400-22,300. The index is trading above all important moving averages on all time frames and has formed a Bullish Piercing Line pattern on the weekly charts, according to experts. 22,200 is the critical support point.
FO Cues
The weekly options data showed that 22,800 and 23,000 strikes on the Call side had the most open interest, which could act as resistance levels for the index in the coming week, while 22,400, 22,200, and 22,000 strikes on the Put side had the most open interest, which could act as support levels.
The fear measure, the India VIX, rose from 10.93 to 20.53 for the third week in a row, which should be watched as the market near general election outcomes. Experts say greater volatility may make bulls uncomfortable.
Corporate Action
Shares of as much as 16 companies will trade ex-dividend next week. These companies include Anupam Rasayan India, Sula Vineyards, Tata Coffee, HDFC, HDFC Bank, Sundram Fasteners, Foseco India, Man Infraconstruction, Advanced Enzyme Technologies, Colgate-Palmolive, Home First Finance Company India, JM Financial, Rain Industries, and Tata Consumer Products.
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