Week Ahead:- The market is expected to consolidate further in the coming week due to the focus on March FY24 quarter earnings, advance US GDP estimates, and Middle East tensions.
The market rebounded on the final day of the week, focusing on Iran-Israel tensions and banking recovery. However, it fell 1.6% for the week ended April 19, partly due to FII selling and hawkish Fed comments. The market is expected to react to Wipro and HDFC Bank earnings, US GDP estimates, and Middle East tensions.
The Nifty 50 and BSE Sensex experienced a significant drop in the week, with the Nifty Midcap 100 index falling 2.7% and the Smallcap 100 index declining 1.4%. Market volatility is expected due to geo-political tensions, hawkish US Fed comments, and selling FIIs. Focus will be on earnings season and global economic data.
Key factors for upcoming week
Fourth Quarter Earnings
Domestically, market players will focus on corporate earnings, causing more stock-specific movement. Next week, 160 companies will release their quarterly earnings scorecards, including Reliance Industries, Tata Consumer Products, Axis Bank, Hindustan Unilever, LTIMindtree, Bajaj Finance, IndusInd Bank, Nestle India, Tech Mahindra, Bajaj Finserv, HCL Technologies, Maruti Suzuki India, ICICI Bank, SBI Life Insurance Company, and Shriram Finance, which make up 34% of the Nifty
Next week, ICICI Prudential Life Insurance Company, ACC, Aditya Birla Money, Mahindra & Mahindra Financial Services, MCX India, Tata Elxsi, Indian Hotels, Macrotech Developers, Syngene International, Cyient, L&T Technology Services, CSB Bank, SBI Cards and Payment Services, IDFC First Bank, L&T Finance Holdings, RBL Bank, and Yes Bank will report
US GDP
The April 25 US GDP advance projections for the first quarter of 2024 will interest investors worldwide. The quarter is expected to have good US GDP figures, up from 3.4 percent in Q4-2023.
Investors will also watch April Manufacturing and Services PMI flash data and US weekly unemployment claims next week.
Global Economic Data
Market players will also follow Japan’s policy announcement and April Japan and Europe Manufacturing & Services PMI flash data. Short-term interest rates are projected to remain steady during the Bank of Japan’s April 26 policy meeting.
Iran-Israel Conflict and Oil Prices
The drop in oil prices below $90 a barrel suggests Iran-Israel tensions may not escalate. However, the market will monitor it, so oil prices may fluctuate in the short term.
Despite Iran and Israel’s military attacks, Brent crude futures fell 3.5 percent to $87.29 a barrel last week after rising to $92.18 a week earlier. WTI futures finished at $83.34, down 2.7%, for the week.
We expect oil prices to fluctuate based on headlines, but long-term fundamentals will support them. Mohammed Imran, Sharekhan Research Analyst, said oil might surge if Iran retaliates, but otherwise WTI could hit $80 this week.
Domestic Economic Data
Domestically, market players will watch April’s HSBC Manufacturing and Services PMI Flash figures on April 23. Manufacturing PMI was 59.1 and services 61.2 in March, up from 56.9 and 60.6 in February.
Forex reserves for the week ending April 19 will be announced on April 26.
Fii Flow
Foreign institutional investors sold heavily for another week after increased US bond rates and inflation, weakening market confidence. They sold well in tech stocks. Thus, continued selling may restrict market upside, even if domestic institutional investors have continuously supported the market by purchasing on every downturn, analysts said.
FIIs sold Rs 11,867 crore of cash-segment equity shares this week, bringing their monthly outflow to Rs 22,229 crore in April. DIIs purchased Rs 12,233 crore, bringing their monthly net purchasing to Rs 21,269. DIIs continued to offset FII outflows.
Primary market
Next week, Dalal Street will host the Rs 649.5-crore JNK India IPO on April 23 and conclude on April 25, while Vodafone Idea will finish its Rs 18,000-crore follow-on public offer on April 22.
SME IPOs include Varyaa Creations on April 22, Shivam Chemicals on April 23, and Emmforce Autotech on April 23. All close on April 25.
Opening on April 23, the Faalcon Concepts IPO will close on April 23 and launch on the BSE SME on April 26. Greenhitech Ventures will list its equity shares on the BSE SME on April 23, and Grill Splendour Services and Ramdevbaba Solvent will trade on the NSE Emerge.
Technical View
With Bullish Piercing Line and Double Bottom formations on daily charts, the trend appears to have gotten robust. On closing basis, the index defended its rising support trendline, matching closely with the crucial 22,000 level. Experts predict the upswing to extend to 22,300 in the following sessions and hold into 22,500, with support between 22,000 and 21,900.
“If momentum continues, 22,300 may become 22,500, the next resistance level to watch. Master Capital Services Senior Vice President Arvinder Singh Nanda said 22,000 support is immediate.
He thinks a Piercing Line pattern on the daily chart reinforces bullish mood. “The indicator also broke the 55-day exponential moving average (EMA) at 22,067, indicating a short-term uptrend. A closure above this moving average boosts bullishness.”
F&O Signals
The monthly options data also predicted future Nifty 50 resistance at 22,300, followed by 22,500 and support at 22,000. The 22,000 level will be important this week.
Monthly options data showed that the 23,000 strike had the most Call open interest, followed by 22,500 and 22,300 strikes, with considerable Call writing at 22,500 and 22,600 strikes. The Put side had the most open interest at 22,000 strike, followed by 21,000 and 21,500 strikes, then 21,800, 21,900, and 21,700 strikes.
During the week, the fear measure India VIX rose 16.7% to 13.46 but could not remain above 14. Bulls were uncomfortable all week, but Friday’s cooling from 14 level left them in a better position. Thus, if volatility falls more, bulls may feel more confident.
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