Week Ahead: Inflation data, Q3 results, global cues among key market triggers this week

Domestic equity benchmarks BSE Sensex and Nifty 50 logged weekly losses but ended the week higher supported by banks. On the sectoral front, indices gave a mixed performance with PSU bank rising the most becoming the top performer and the FMCG sector declined the most.

Markets traded lackluster in a range and settled with a marginal cut, in continuation to the prevailing consolidation phase of markets. After the muted start, Nifty 50 oscillated on both sides, tracking mixed trends in the heavyweights across sectors, said market analysts.

Also Read: Nifty February series outlook: 4 stocks where investors can park their money; do you own?

“When valuations are high, the bears will use any negative news to drag the market down,” said Dr VK Vijayakumar, chief investment strategist at Geojit Financial Services, referring to “slightly hawkish comments” from the Reserve Bank of India (RBI) governor on Thursday.

The RBI kept interest rates unchanged on Thursday, as expected, and signaled rate cuts may not be imminent. The BSE benchmark fell by 723.57 points or one per cent to settle at 71,428.43 on Thursday amid uncertainty about the timing of interest rate reduction after the RBI policy decision. The Nifty declined by 212.55 points or 0.97 per cent to 21,717.95.

On the weekly front, the BSE benchmark declined 490.14 points or 0.67 per cent, and the Nifty dipped 71.3 points or 0.32 per cent. The broader, more-domestically focused small-caps closed flat, while mid-caps added 0.85 per cent for the week. Both indexes logged their worst session in more than two weeks on Friday.

‘’Post the hawkish commentary from the US Fed and RBI and their focus on bringing inflation under control, next week’s inflation data would be important data to watch out for. We expect the market to turn cautious and consolidate in the near term amid key macro data to be announced and the last leg of Q3 results,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Going forward, a busy week awaits the primary market as several new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The upcoming week will be crucial from the domestic and technical point of view as investors will closely eye the corporate results along with domestic and global cues.

Overall, analysts expect consolidation phase in markets to continue in the near-term, but expect that decisive break above 22,150 in Nifty and 47,000 in banking could only fuel the fresh momentum, upon stability in the banking index. Experts also advice that traders should continue with stock-specific approach and prefer a hedged approach.

Here are the key triggers for stock markets in the coming week:

 

Domestic Macroeconomic Data, Q3 Results:

On the macroeconomic front, India’s consumer price index (CPI)-based inflation or inflation rate for January and index of industrial production (IIP) data for December are scheduled for release on February 12, followed by the wholesale price index (WPI) -based inflation on February 14. The last batch of the ongoing Q3FY24 results will be declared this week, which can lead to stock specific movement.

4 new IPOs, 9 listings to hit D-Street:

In the mainboard segment, Vibhor Steel Tubes IPO opens for subscription on February 13, 2024 and closes on February 15, 2024. Among the ongoing IPOs, Entero Healthcare Solutions IPO will close on February 13. 

In the SME segment, WTI Cabs IPO opens for subscription on February 12 and closes on February 14. Thaai Casting IPO and Kalahridhaan Trendz IPO open for bidding on February 15 and close on February 19 and 20, respectively.

Among listings, shares of Apeejay Surrendra Park will get listed on stock exchanges BSE, NSE on February 12. Shares of Rashi Peripherals, Jana Small Finance Bank, and Capital Small Finance Bank will debut on BSE, NSE on February 14. Shares of Entero Healthcare Solutions will debut on February 16.

Additionally, shares of Italian Edibles will get listed on NSE SME on February 12. On February 15, shares of Alpex Solar and Rudra Gas Enterprise will debut on NSE SME and BSE SME respectively. Shares of Polysil Irrigation Systems will get listed on NSE SME on February 16.

FII Activity:

Foreign institutional investors (FIIs) were buyers for three out of five sessions last week with a total divestment of ₹5,871.45 crore, while domestic institutional investors also bought for three sessions with a total investment of ₹5,325.76 crore, according to stock exchange data.

Foreign portfolio investors (FPIs) started February on a positive note but took a U-turn on global cues and continued January’s selling streak in Indian markets. FPIs turned massive sellers in January 2024 snapping their buying streak as investments saw a sharp uptick in December 2023 after they reversed their three-month selling streak in November 2023.

FPIs have sold ₹3,075 crore worth of Indian equities and the total inflow stands at ₹12,590 crore as of February 9, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.

Analysts noted that the selling was aggravated with FIIs running with the bears. There is a significant build up in the short position of FIIs. This normally happens along with the rise in the US 10-year bond yields which is now at 4.15 per cent.

‘’FII selling and bear onslaught are unlikely to take the market down significantly. There will be strong buying on dips. The sustained flows into mutual funds which are gathering momentum will enable the DIIs to buy aggressively. A good investment strategy now would be to buy the bluechips which FIIs are selling,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Global Cues:

In the coming week market will react to the global economic data, foreign capital inflow, crude oil inventories, the movement of the rupee against the dollar, and trends in the global stock market. 

‘’US CPI numbers will be released on February 13, while their retail sales numbers will be announced on February 15. Amid these numbers, the movement in US bond yields and the dollar index will be watched. Apart from this, movements of crude oil and flows from institutional investors will be other important factors,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Some other major economic data that could impact the market are the UK employment rate, Japan’s GDP and industrial production numbers, Eurozone Employment, GDP, industrial production and trade balance data.

‘’Amid the choppiness on the local front, a steady uptrend in the US markets is giving some comfort. We were eyeing 39,000 in the Dow Jones Industrial Average(DJIA) and it has almost reached closer to the mark. They may also see some profit taking but the tone is likely to remain positive,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Oil Prices:

Oil prices settled higher in the previous session, up about six per cent on a week-on-week basis, as worries about supply from the Middle East mounted and as reining outages tightened refined products markets, according to news agency Reuters.

Brent crude futures settled up 56 cents, or 0.7 per cent, at $82.19 a barrel. US West Texas Intermediate crude futures settled up 62 cents or 0.8 per cent, at $76.84 a barrel. Oil futures rose throughout the week, buoyed after Israeli Prime Minister Benjamin Netanyahu’s rejection of a Hamas ceasefire proposal on Wednesday. This week’s rise followed a seven per cent loss in the prior week.

US domestic production returned this week to a record 13.3 million barrels per day level, according to the US Energy Information Administration. Last month, frigid weather caused widespread shut-ins in oil producing regions. 

Israeli forces on Friday continued deadly air strikes on the Gaza Strip. On Thursday, the bombing of the southern border city of Rafah helped boost oil prices by around three per cent, according to Reuters.

Corporate Action:

Shares of several companies, including Nestle India, Power Grid Corporation of India, Oil & Natural Gas Corporation (ONGC), IRCON International and many others will others will trade ex-dividend in the coming week, starting from Monday, February 12. Some other companies will also trade ex-bonus and ex-rights in the coming week. Check full list here

Technical View:

Going ahead, analysts expect the consolidation to continue in the Nifty and banking holds the key for the next directional move as other key sectors have done their part. 

‘’A decisive break above 22,150 in Nifty and 47,000 in banking could only fuel the fresh momentum while the 21,200-21,450 zone would offer support, in case the profit taking resumes. On the sectoral front, we reiterate our preference for IT, metal, pharma for long trades and expect a cool-off in the others, especially the PSU pack. Traders should continue with stock-specific approach and prefer a hedged approach,” said Religare’s Ajit Mishra.

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd said, ‘’In Nifty, bears exerted downward pressure on the Nifty from the psychological level at 22,000. For Nifty, the next support is at 21,650 and a breach of it can lead to a correction towards 21,400. On the upside, key hurdles are placed at 22,000-22,100.”

The Bank Nifty bulls exhibited strength as they successfully defended the crucial support level of 45,000, establishing it as a critical support zone.

” The index is currently in a “buy on dip” mode, and as long as the mentioned support holds on a closing basis, the bullish sentiment remains intact. Looking ahead, the immediate resistance on the upside is situated at 46,000, and a decisive break above this level is anticipated to trigger further short-covering moves in the market,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 11 Feb 2024, 06:17 AM IST