Stock market this week: Q4 results, US debt ceiling talks, other factors that could drive equities this week

After a roller-coaster week, stock market indices managed to close at a decent level after a marginal rebound on Friday. Q4 results of major firms, foreign funding, Us debt ceiling negotiations, FOMC minutes, and other global cues guide the market movement in the coming week. There are chances of persistent market volatility due to the scheduled monthly derivatives expiry this week.

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The stock market witnessed a consecutive three-day loss of wealth last week. After Friday's gain, Nifty closed 0.61 per cent down at 18,203.40 levels and BSE Sensex settled at 61,729.68 points. Quarterly results of major firms like BPCL, Ashok Leyland, Hindalco, ONGC, Grasim and Zeel will affect the market sentiments this week.

Unlike the bearish market trend, banking stocks looked resilient. They were accompanied by the sound performance of IT majors. In addition to banking and IT, broader indices and midcap index also made gains this week.

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Market experts believe that market choppiness will continue this week as well. Mainly because of the scheduled expiry of May month derivatives contracts, global market performance, and FII flow in the economy.

“The marginal rebound on Friday trimmed some losses and Nifty eventually settled at 18,203.40 levels; down 0.61%. Amid all this, resilience in banking played combined with a rebound in the IT majors eased some pressure. Interestingly, the broader indices continued their outperformance while the midcap index ended marginally higher and smallcap gained nearly a percent,” said Ajit Mishra, VP - Technical Research, Religare Broking Ltd.

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Citing market's unpredictable movement he said that the trend will continue in the coming week as well due to the scheduled expiry of May month derivatives contracts. “Meanwhile, global markets performance and consistency in the foreign flows will remain on the participants’ radar for cues,” he added.

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“Nifty respected the crucial support at 18,050 on Friday and its sustainability would be critical for the index to retest the 18,500-18,700 zone. In case of a breakdown, 17,850 zone would offer the needed cushion. Meanwhile, traders should limit their focus on identifying stocks from the preferred sectors like banking, financials, FMCG, and auto as they’re showing resilience amid consolidation. They can also selectively look at midcap and smallcap counters citing their prevailing out-performance,” he added.

FPI inflow

Driven by strong macroeconomic fundamentals, the prospect of reducing interest rates, a positive earnings outlook, and falling stock valuations, there has been a constant inflow of equity by foreign investors in India.

Till May, around ₹30,945 crore have been invested by foreign investors in Indian equities. The continued inflow data has taken the net inflow to ₹16,365 crore in 2023 so far.

Chief Investment Strategist at Geojit Financial Services believes that the FPI investment in India will continue to rise due to optimism around corporate earnings and strong prospects of the Indian economy.

According to data from the depositories, FPIs invested a net sum of ₹30,945 crore in Indian equities during May 2 - May 19.

Quarterly results this week

The last phase of quarterly earnings season has a lot to offer to market investors. Earnings of companies like BPCL, Ashok Leyland, NMDC, Hindalco, Oil India, LIC, Vodafone Idea, BHEL, ONGC, Sun Pharmaceuticals, etc will declare their result this week. Company results announced on Saturday will impact their company's stock performance on Monday.

Emphasising market investors' response to earnings scheduled for next week, he said, “ On the earnings front, some prominent names like BPCL, Ashokley, Hindalco, ONGC, Grasim and Zeel will announce their numbers during the week,”

US debt ceiling negotiations

The ongoing negotiations to raise the debt ceilings in the USA will also impact the market movement in the coming week. Recently, President Joe Biden and top US congressional Republican Kevin McCarthy expressed the need to reach a deal soon. It is important to come to an agreement and pass it in both chambers of Congress before 1 June.

Fed minutes

Federal Open Market Committee is scheduled to release its meeting minutes next week on May 24. On May 4, US Fed bank increased the interest rate by 25 basis points to deal with the banking crisis and inflation.