Indian markets remained volatile for yet another week but managed to end in the green. The beginning was downbeat, tracking feeble global cues but the situation improved in the following sessions with stability in the world indices. However, pressure in the IT majors combined with the prevailing underperformance of the banking pack continues to weigh on the sentiment.
“The rebound from the sluggish start, propelled by positive expectations on Q2 earnings and moderation in global bond yield despite concerns over the Middle East conflict continues to hover. The release of higher-than-anticipated US inflation data and resulting increase in treasury yields marginally offset the positive trend by the end of the week,” said Vinod Nair, Head of Research at Geojit Financial Services.
Domestic benchmark equity indices slipped into the negative territory in the previous session despite some intraday recoveries. In the last hour of the trade, index heavyweight stocks such as HDFC Bank, Kotak Mahindra Bank, State Bank of India, and Axis Bank witnessed major selling dragging down the benchmark indices.
Nifty 50 lost 42.95 points to settle at 19,751.05. The Sensex falls 125.65 points to close at 66,282.74. Further, IT stocks also weighed on the market sentiment on the backdrop of US inflation worries.
Despite the fall on Friday, the benchmarks logged weekly gains of nearly 0.5 per cent each, due to a relief rally earlier in the week on easing US yields and dovish comments from US Federal Reserve officials.
While domestic factors such as a significant drop in CPI data and impressive industrial production helped to sustain the broad optimism. Weak start to the result season by IT sector’s subdued revenue guidance, combined with uptick in crude oil prices affected the broad market trend, according to Geojit’s Nair.
Going forward, a busy week awaits the primary market as three new initial public offerings (IPOs) are slated across mainboard and small-and-medium enterprises (SME) segments. The week will be crucial from the domestic and technical point of view as investors will closely eye the ongoing Q2FY24 results.
Overall, analysts expect the market to remain range-bound as participants will take further cues from a surge in crude oil prices, the Israel-Hamas conflict, and quarterly results of Indian banks, along with the mood of foreign investors.
Here are the key triggers for stock markets in the coming week:
Q2 Results, RBI MPC Minutes:
Some major companies will be announcing their quarterly results in the coming week such as Federal Bank, Bajaj Finance, CEAT, Tata Coffee, ICICI Prudential Life Insurance, Bajaj Auto, Mastek, IndusInd Bank, Wipro, Jio Financial Services, PVR Inox, Coforge, Hindustan Unilever, Metro Brands, Havells, ITC, Mphasis, Nestle, UltraTech Cement, Voltas, Paytm, JSW Steel, Hindustan Zinc, Cyient, and many more.
The Reserve Bank of India’s Monetary Policy Committee (MPC) left the benchmark repo rate unchanged at 6.5 per cent on October 6, in line with D-Street estimates. The rate-setting panel will release its minutes of the meeting on October 19, which will present insights into the state of the economy that influenced the MPC decisions.
Wholesale Price Index (WPI)-based Inflation Data:
The WPI-based inflation data for September is due to be released on Monday, October 16. India’s WPI remained in negative for the fifth straight month in August at -0.52 per cent, according to government data. On the other hand, India’s consumer price index (CPI)-based inflation eased sharply to 5.02 per cent in September, coming within RBI’s tolerance band 2-6 per cent after a gap of two months.
3 IPO opens, 1 new listing to hit D-Street:
IRM Energy IPO: The mainboard issue opens for subscription on Wednesday, October 18, and closes on Friday, October 20.
WomanCart IPO: The SME IPO opens for subscription on October 16, 2023 and closes on October 18, 2023.
Rajgor Castor Derivatives IPO: The SME IPO opens for subscription on October 17, 2023 and closes on October 20, 2023.
New Listing: Committed Cargo Care- Shares of the SME IPO will get listed on NSE SME on Wednesday, October 18.
FII Outflow:
Foreign portfolio investors (FPIs) continued their selling streak in the second week of October, a trend that started last month, on high US bond yields. FPIs have sold ₹9,784 crore worth of Indian equities and offloaded a total of ₹5,867 crore as of October 13, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.
Foreign institutional investors (FIIs) continued their selling streak in the second week of October after recording a massive outflow ( ₹25,000 crore sell value in cash markets) from Indian markets last month over global cues.
‘’The Indian market continues to exhibit resilience even in the midst of many challenges and, therefore, there is a growing concern among FPIs that if they continue to sell, they will miss out on the potential rally in the Indian market. This might restrain the FPIs from selling heavily in the coming days,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Global Cues:
Global events such as Eurozone Trade Balance, US retail sales, initial jobless claims, existing home sales, US Federal Reserve Chair remarks, China Q3 GDP data, UK CPI and PPI numbers will drive the market in the coming days. The upcoming festive season could provide an impetus to the consumption scenario in the economy.
Investors will closely monitor the escalating Israel war situation, crude oil prices, and quarterly earnings of major global companies/banks. ‘’The market’s initial reaction on the new week will be influenced by the sharp surge in crude oil prices over the weekend,” said Santosh Meena, Head of Research, Swastika Investmart. The trajectory of the US market, particularly Nasdaq’s pattern of lower highs and lower lows, will play a pivotal role in market sentiment.
‘’Global cues would continue to play a critical role in setting the direction of our markets. Among the key indices, the US benchmark, the Dow Jones Industrial Average (DJIA), tested a hurdle at 33,800 and couldn’t surpass it. We need a decisive break above 34,200 for a steady recovery else the decline would resume,” said Ajit Mishra, SVP – Technical Research, Religare Broking.
Oil Prices:
Oil prices climbed nearly 6 per cent on Friday, with benchmark Brent posting its highest weekly gain since February, as investors priced in the possibility that the conflict in the Middle East could widen as Israel began ground raids inside the Gaza Strip. Market experts reckon that the crude oil market remains hyper-alert to any indication that the Israel-Hamas conflict is poised to expand into the oil producing region in the Middle East.
Brent futures settled up $4.89, or 5.7 per cent, at $90.89 per barrel. US West Texas Intermediate (WTI) crude gained $4.78, or 5.8 per cent, to $87.69 a barrel. Both benchmarks posted their highest daily percentage gains since April. Brent also recorded a weekly gain of 7.5 per cent, its biggest such increase since February, according to news agency Reuters.
Corporate Action:
Shares of several companies including Tata Consultancy Services (TCS), HCL Technologies, Glenmark Life Sciences, among several others will trade ex-dividend in the coming week, starting from Monday, October 16. Few stocks will also trade ex-split and ex-bonus in the coming week. Check full list here
Technical View:
Nifty is currently hovering around the short term average(20 EMA) but facing stiff resistance due to lack of participation from two key sectors– IT and banking, according to analysts. They doubt that it could make a meaningful recovery without their contribution as they combined hold nearly 50 per cent weight in the index.
‘’Sectors like auto, energy, pharma, realty and metal are showing resilience so traders should align their trades accordingly. Also, we suggest keeping a check on position size and overnight risk management as volatility will remain high,” said Religare’s Ajit Mishra.
‘’Buy the dip is likely to remain in focus as prices managed to trade above the key psychological mark of 19,500 if it manages to close above 19,900 then we can expect a new high. Conversely, a decisive fall below 19,300 will be seen as a short-term trend reversal which can lead Nifty towards 19,000-18,800,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services.
As for Bank Nifty, with minor gains Bank Nifty closed the week around 44,300 which is closing below last week’s close price but maintaining to close above 44,000.
‘’Resistance is established at the 44,700 mark, while the support lies at 44,000. The overall market sentiment remains bullish as long as the critical support at 44,000 holds, and a breach below this level, confirmed by a closing basis, may lead to renewed selling pressure.” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities
‘’A substantial short-covering rally is anticipated only if Bank Nifty manages to breach the 45,000 mark,” added Swastika Investmarts’ Santosh Meena.
Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 15 Oct 2023, 07:29 AM IST