Last week, after a few swinging sessions, the market ended on a positive note tracking gains in global cues. The Sensex closed at 54,326.39, up 1534.16 points or 2.91%. Nifty 50 closed at 16,266.15, up 456.75 points or 2.89%.
Ajit Mishra, VP Research Religare Broking said,Market A 5-week downtrend ended and surged over 3% amid extreme volatility. Global signals eg. Fears of aggressive rate hikes by the US Fed, the Russia-Ukraine crisis, largely set the trend and kept participants on their toes. Finally, the benchmark indices, Nifty and Sensex, ended with gains of 3.1% and 2.9% at 16,266 and 54,326 levels. Barring IT, most of the sectoral indices participated in the rebound and broader indices also posted gains in the range of 3-4%.
Here are 10 factors that will drive the market’s performance this week:
Earnings:
The market is currently at the end of the earning season. Companies like Divis Laboratories, SAIL, Adani Ports, Grasim, Coal India, Zee Entertainment, Gail and JSW Steel will announce their numbers during the week.
F&O Termination:
The week will remain in focus amid the expiry of the May series derivatives scheduled on May 26. Market volatility is expected to remain higher as investors move towards the F&O closure.
ICICI Direct in its Derivatives Weekly View report said that going forward, a move above the VWAP series of 16350 would be crucial for sustained recovery in the settlement week.
With respect to the data perspective, ICICI Direct guides that short positioning of FIIs has come down drastically as their net shorts in index futures with long positions in the stock futures segment has come down from 1.25 lakh contracts to 77,000 contracts. Hence, if Nifty sustains above 16350, the upward move is likely to continue till 16800
Further, ICICI Direct explained that the volatility index has risen further and tested 25 levels before closing the week near 23. Considering the roll movement, intraday volatility is likely to remain high. However, with lower open interest in both Nifty and Bank Nifty, fresh accumulation in the May series should pave the way for further upside.
inflation:
Inflation continues to influence the broader market sentiments. CPI inflation rose sharply to 7.79% in April, hitting an eight-year high on rising food prices.
WPI inflation rose to an all-time high of at least nine years at 15.08% in April on rising prices of metals, crude oil, food items and others. This would be the thirteenth consecutive high of double-digit gains.
Also, the market will react to the reduction in excise duty by the government. 8 per liter on petrol and buy 6 per liter on diesel.
FOMC Minutes Meeting:
Markets will also respond to the Federal Open Market Committee meeting minutes scheduled for May 25. The FOMC meeting minutes are a detailed record of the committee’s policy-making meeting held almost two weeks ago.
Foreign investors selling bias:
Foreign investors have been net selling throughout the month. Unabated foreign fund outflow has weakened the rupee and further intensified the volatility in the market.
Year after year, FPIs pulled out huge amounts 1,62,299 crore from the Indian equity market.
Listing:
This week two companies will debut in the market. Delhivery and Venus Pipes & Tubes are likely to list on Tuesday.
delhivery launched 5,235 crore initial public offering, while Venus’ 165.42 crore IPO also came earlier this month. Both the IPOs are fully subscribed.
IPO:
Digital Signature Certificate, eMudhra’s 412.79 crore will continue till May 24. Meanwhile, specialty chemicals manufacturer, Ather Industries is set to launch its initial public offering (IPO) for subscription on May 24 and bidding will continue at the price band till May 26. from 610 642 per equity share.
US GDP data:
The US Gross Domestic Product (GDP) figures for the first quarter are expected on Thursday, May 26, 2022.
Dollar Index:
After the US currency climbed to a record high of 20 years, the greenback has declined somewhat. The performance of the rupee against the dollar will be closely monitored.
Jatin Trivedi, VP Research Analyst, LKP Securities, said, the dollar index is still above $102. On the other hand, crude gives a little strength to the rupee around $110. Rupee still keeps taking resistance around 77.25 at 20dma so some gains can be seen towards 77.25 as rupee keeps testing 20dma resistance above 77.25 then trend will change for rupee unless rupee goes wider remains weak. Rupee can be seen in the range of 77.25-77.75.
China’s Kovid Status:
China’s rapid rise in COVID-19 cases continues to threaten global markets as dent production and supply chain bottlenecks impact industry activity. China currently has strict lockdowns and restrictions in key areas. Any resurgence in Covid cases could affect the market sentiment.
What do experts say about this week’s trading session?
Vinod Nair, Head of Research, Geojit Financial Services, said, “Domestic markets were moving in line with global counterparts this week. Concerns of a global economic slowdown and rate hikes weighed on market sentiments. UK retail inflation numbers with Fed The Chair’s assurances on easing inflation tempered risk appetite over fears of sharp rate hikes. Recent earnings reported by US retailers reflect the heat of high retail inflation, resulting in a slump in Wall Street I. FIIs continued their selling spree. They pursued higher-yield US bonds, adding to the volatility in the Indian market. However, an improved outlook for Chinese tech stocks and a key interest rate by the Chinese Central Bank to support growth. cut, which infuses optimism in emerging markets.”
Mishra expects the tempering to be higher due to the scheduled end of monthly. Apart from this, monsoon related updates will also be in focus. In line with the prevailing trend, global factors viz. The performance of the global markets especially the US, China’s COVID update and Russia-Ukraine news will remain on the radar of the participants.
“Markets are seeing wild swings within the 15,700-16,400 range and are currently trading close to the upper band. Participants should wait for a decisive close above 16,400 to reverse bias. In case of breakout , 16,650-16,800 zone acts as a barrier,” said Mishra.
“Going forward, cooling off in volatility will help Nifty cross 16400 levels and move towards 16800 in a nonlinear fashion,” ICICI Direct said in its weekly market outlook report. Buying towards 15800-16000 would be beneficial. Because strong support is present around 15600 level.”
What should investors do?
Nair said that since investors are now investing with caution, value stocks should outperform during this consolidation period, which is supported by moderate valuations.
Meanwhile, Misra guided that among sectoral indices, defensive indices such as FMCG and pharma are set to move further, while others may continue to trade mix. Traders should align their positions accordingly and maintain positions on both sides.
Which stocks to choose?
According to the ICICI Direct report, sector-wise, auto, metal, BFSI and capital goods stocks offer favorable risk-reward in the current times.
“In large cap we prefer Reliance Industries, SBI, Kotak Bank, ITC, Maruti Suzuki, Hindalco, Cipla while in midcap we prefer ABB, Ashok Leyland, Apollo Tyres, Automotive axles, Hindustan Aeronautics, Indian Hotels prefer PVR. , Tata Chemicals, SRF, NMDC, Alcon Engineering.”
Markets Weekly Tips: 10 Factors That Trigger Sentiment, What Investors Should Do
Last week, after a few swinging sessions, the market ended on a positive note tracking gains in global cues. The Sensex closed at 54,326.39, up 1534.16 points or 2.91%. Nifty 50 closed at 16,266.15, up 456.75 points or 2.89%.
Ajit Mishra, VP Research Religare Broking said,Market A 5-week downtrend ended and surged over 3% amid extreme volatility. Global signals eg. Fears of aggressive rate hikes by the US Fed, the Russia-Ukraine crisis, largely set the trend and kept participants on their toes. Finally, the benchmark indices, Nifty and Sensex, ended with gains of 3.1% and 2.9% at 16,266 and 54,326 levels. Barring IT, most of the sectoral indices participated in the rebound and broader indices also posted gains in the range of 3-4%.
Here are 10 factors that will drive the market’s performance this week:
Earnings:
The market is currently at the end of the earning season. Companies like Divis Laboratories, SAIL, Adani Ports, Grasim, Coal India, Zee Entertainment, Gail and JSW Steel will announce their numbers during the week.
F&O Termination:
The week will remain in focus amid the expiry of the May series derivatives scheduled on May 26. Market volatility is expected to remain higher as investors move towards the F&O closure.
ICICI Direct in its Derivatives Weekly View report said that going forward, a move above the VWAP series of 16350 would be crucial for sustained recovery in the settlement week.
With respect to the data perspective, ICICI Direct guides that short positioning of FIIs has come down drastically as their net shorts in index futures with long positions in the stock futures segment has come down from 1.25 lakh contracts to 77,000 contracts. Hence, if Nifty sustains above 16350, the upward move is likely to continue till 16800
Further, ICICI Direct explained that the volatility index has risen further and tested 25 levels before closing the week near 23. Considering the roll movement, intraday volatility is likely to remain high. However, with lower open interest in both Nifty and Bank Nifty, fresh accumulation in the May series should pave the way for further upside.
inflation:
Inflation continues to influence the broader market sentiments. CPI inflation rose sharply to 7.79% in April, hitting an eight-year high on rising food prices.
WPI inflation rose to an all-time high of at least nine years at 15.08% in April on rising prices of metals, crude oil, food items and others. This would be the thirteenth consecutive high of double-digit gains.
Also, the market will react to the reduction in excise duty by the government. 8 per liter on petrol and buy 6 per liter on diesel.
FOMC Minutes Meeting:
Markets will also respond to the Federal Open Market Committee meeting minutes scheduled for May 25. The FOMC meeting minutes are a detailed record of the committee’s policy-making meeting held almost two weeks ago.
Foreign investors selling bias:
Foreign investors have been net selling throughout the month. Unabated foreign fund outflow has weakened the rupee and further intensified the volatility in the market.
Year after year, FPIs pulled out huge amounts 1,62,299 crore from the Indian equity market.
Listing:
This week two companies will debut in the market. Delhivery and Venus Pipes & Tubes are likely to list on Tuesday.
delhivery launched 5,235 crore initial public offering, while Venus’ 165.42 crore IPO also came earlier this month. Both the IPOs are fully subscribed.
IPO:
Digital Signature Certificate, eMudhra’s 412.79 crore will continue till May 24. Meanwhile, specialty chemicals manufacturer, Ather Industries is set to launch its initial public offering (IPO) for subscription on May 24 and bidding will continue at the price band till May 26. from 610 642 per equity share.
US GDP data:
The US Gross Domestic Product (GDP) figures for the first quarter are expected on Thursday, May 26, 2022.
Dollar Index:
After the US currency climbed to a record high of 20 years, the greenback has declined somewhat. The performance of the rupee against the dollar will be closely monitored.
Jatin Trivedi, VP Research Analyst, LKP Securities, said, the dollar index is still above $102. On the other hand, crude gives a little strength to the rupee around $110. Rupee still keeps taking resistance around 77.25 at 20dma so some gains can be seen towards 77.25 as rupee keeps testing 20dma resistance above 77.25 then trend will change for rupee unless rupee goes wider remains weak. Rupee can be seen in the range of 77.25-77.75.
China’s Kovid Status:
China’s rapid rise in COVID-19 cases continues to threaten global markets as dent production and supply chain bottlenecks impact industry activity. China currently has strict lockdowns and restrictions in key areas. Any resurgence in Covid cases could affect the market sentiment.
What do experts say about this week’s trading session?
Vinod Nair, Head of Research, Geojit Financial Services, said, “Domestic markets were moving in line with global counterparts this week. Concerns of a global economic slowdown and rate hikes weighed on market sentiments. UK retail inflation numbers with Fed The Chair’s assurances on easing inflation tempered risk appetite over fears of sharp rate hikes. Recent earnings reported by US retailers reflect the heat of high retail inflation, resulting in a slump in Wall Street I. FIIs continued their selling spree. They pursued higher-yield US bonds, adding to the volatility in the Indian market. However, an improved outlook for Chinese tech stocks and a key interest rate by the Chinese Central Bank to support growth. cut, which infuses optimism in emerging markets.”
Mishra expects the tempering to be higher due to the scheduled end of monthly. Apart from this, monsoon related updates will also be in focus. In line with the prevailing trend, global factors viz. The performance of the global markets especially the US, China’s COVID update and Russia-Ukraine news will remain on the radar of the participants.
“Markets are seeing wild swings within the 15,700-16,400 range and are currently trading close to the upper band. Participants should wait for a decisive close above 16,400 to reverse bias. In case of breakout , 16,650-16,800 zone acts as a barrier,” said Mishra.
“Going forward, cooling off in volatility will help Nifty cross 16400 levels and move towards 16800 in a nonlinear fashion,” ICICI Direct said in its weekly market outlook report. Buying towards 15800-16000 would be beneficial. Because strong support is present around 15600 level.”
What should investors do?
Nair said that since investors are now investing with caution, value stocks should outperform during this consolidation period, which is supported by moderate valuations.
Meanwhile, Misra guided that among sectoral indices, defensive indices such as FMCG and pharma are set to move further, while others may continue to trade mix. Traders should align their positions accordingly and maintain positions on both sides.
Which stocks to choose?
According to the ICICI Direct report, sector-wise, auto, metal, BFSI and capital goods stocks offer favorable risk-reward in the current times.
“In large cap we prefer Reliance Industries, SBI, Kotak Bank, ITC, Maruti Suzuki, Hindalco, Cipla while in midcap we prefer ABB, Ashok Leyland, Apollo Tyres, Automotive axles, Hindustan Aeronautics, Indian Hotels prefer PVR. , Tata Chemicals, SRF, NMDC, Alcon Engineering.”
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