The Nifty 50 ended with weekly gains of 0.4% amid significant volatility and a sell-off in bluechip stocks on Friday after concerns of greater scrutiny on investments done from Mauritius soured D-Street sentiments. When markets resume trading on Monday, a host of important domestic and global events lined up during the holiday-truncated week are likely to impact them.
Commenting on last week’s action, Santosh Meena, Head of Research, at Swastika Investmart, said that Nifty surrendered most of its gains on Friday dragged by US inflation concerns, geopolitical tensions, and selling by Foreign Institutional Investors (FIIs).
The upcoming week promises to show top action with the Iran-Israel conflict taking center stage along with the earnings season which kicked off with the announcement of earnings by Tata Consultancy Services (TCS), Meena said. Oil prices, China GDP data, US retail sales figures, and movements in US bond yields and the dollar index (DXY) will be important macroeconomic events that may influence market sentiments, he opined.
Indian markets will be closed on April 17, Wednesday on account of the Ram Navami holiday.
Factors that are likely to impact movement when markets reopen this week:
1) General Election
Voting will kick off for the 18th Lok Sabha on April 19, Friday, where 102 constituencies in 21 states and union territories will vote to elect their Member of Parliament.
2) Q4 earnings
“Earnings season in India kicked off on Friday with the announcement of quarterly earnings of TCS. This week, 62 BSE-listed companies will announce their January to March quarter results, and the Street will keep an eye on the numbers. Among the ones that are widely tracked include Bajaj Auto, HDFC Life Insurance Company, Wipro, and Jio Financial Services.
3) Iran-Israel conflict
Iran launched explosive drones and fired missiles at Israel late on Saturday in its first direct attack on Israeli territory, a retaliatory strike that raised the threat of a wider regional conflict, as the US pledged “ironclad” backing for Israel.
Both Indian and global markets could see panic selling and heightened volatility in case of any significant escalation in tensions. Markets will also closely monitor the movement of crude oil prices, that are impacted by geopolitical events.
4) US Markets
US stocks tumbled on Friday following a mixed start to the earnings reporting season while worries about potentially escalating tensions in the Middle East rattled financial markets. While Dow 30 ended at 37,983.20, down by 475.84 points or 1.24%, the S&P 500 settled at 5,123.41, lower by 75.65 points or 1.46%. Meanwhile, the Nasdaq Composite gained by over 267.10 points or 1.62% to end at 16,175.10 on Friday.
When Indian markets reopen on Monday, they will take cues from the Friday closing of the US markets. They will also track movement in GIFT Nifty futures on Monday. The latter is an early indicator of movement in the Nifty50.
5) Rupee vs Dollar
The rupee depreciated 7 paise to close at 83.38 against the US dollar on Friday, weighed down by a massive sell-off in domestic equities and a strong greenback against major crosses overseas. Forex traders said elevated crude oil prices also dented investor sentiments. At the interbank foreign exchange market, the local unit opened at 83.36 and touched an intraday low of 83.44 against the greenback. The local unit finally settled at 83.38, registering a loss of 7 paise against its previous close.
“USD/INR rose to 83.41 after the US data despite selling by the RBI and a close below 83.20 on Wednesday. FPIs were the main buyers of the pair as risk aversion took over risk on sentiments till Wednesday,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP said.
“Rupee will be supported only if RBI sells $ and protects it. Else the range for next week will be 83.30 to 83.60 with a risk to the upside,” Bhansali said as he recommended exporters sell for the near term while importers buy the good dips with a stop at 83.50.
6) Corporate Action
April 15, Monday will be the ex-date and record date for the rights issue of Sakuma Exports; April 18 will be the ex-date and record date for the sub-division of Suratwwala Business Group. April 19 will be the ex-date for the Schaeffler India India dividend. The record date is April 20.
7) Technical Factors
Notwithstanding the Friday debacle, the Indian benchmark indices displayed a predominantly positive trend throughout the week marking the fourth consecutive week of gains, Arvinder Singh Nanda, Senior Vice President of Master Capital Services, said.
In Nifty, this week, the prices exhibited a predominantly sideways movement, with the resistance range identified at 22,750-22,800, and support noted at 22,520 and a breakthrough above the 22,750 mark could trigger a rally towards 23,000 in the near future, Nanda said.
As for Bank Nifty, the index maintained a consolidation phase throughout the week, particularly around the threshold of 49,000 and the index now finds immediate support at 48,300. At the same time, resistance persists at 49,000, the Master Capital analyst said, adding that any substantial movement beyond these boundaries is likely to incite significant directional shifts in the market.
His advice to investors is to adopt a strategy of buying on declines and selling during upswings with appropriate stop-loss measures.
8) FII/DII Action
The foreign institutional investors (FIIs) were net sellers of Indian equities and off-loaded shares worth Rs 8,027 crore on Friday, while the domestic institutional investors (DIIs) were also net buyers at Rs 6,341.53 crore.
The performance of domestic and foreign investors will have an impact on the way movement happens in the domestic stock markets.
9) IPO Action
In the SME segment, two IPOs of Ramdevbaba Solvent and Grill Splendour Services will open for subscription. Apart from these two new issues, Dalal Street will see two listings of Teerth Gopicon and DGC Cables and Wires.
10) Crude Oil
Oil rose around 1% on Friday as geopolitical tensions in the Middle East outweighed a bearish world oil demand growth forecast from the International Energy Agency (IEA) and reduced expectations for US interest rate cuts this year.
Brent crude futures for May settled at $90.19 a barrel, gaining $0.410, or 0.46%. The more actively traded June contract settled at $85.45 a barrel, rising $0.51, with the May contract expiring on Friday.
On MCX, the April crude oil contract settled at Rs 7,190, up by Rs 3 or 0.04%. Oil prices are critical to Indian macros and inflation.
11) Bond Yields
Indian government bond yields jumped on Friday, with the benchmark yield posting its biggest single-day rise in six months, tracking US yields after elevated inflation reaffirmed doubts over interest rate cuts in the near future. The yield on the benchmark Indian 10-year ended at 7.1794%, the highest since Jan. 24, after closing at 7.1112% in the previous session.
The yield posted its biggest single-session rise since October 6 when the central bank had spoken about the use of open market sale of bonds to manage liquidity. For the week, the yield rose six basis points, after rising seven bps in the first week of the financial year.
“The third successive hot inflation print in the US has completely shaken expectations of both the extent and the timing of rate cuts in 2024. We continue to maintain that the Fed will not cut rates this year,” said Madhavi Arora, lead economist at Emkay Global.
Inputs from agencies
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
