Week Ahead: Auto sales, F&O expiry, Q3 GDP data, global cues among key market triggers this week
- Overall, analysts expect volatility to remain high due to the scheduled expiry of February month derivatives contracts, but indications are in favor of Nifty 50's steady up move toward the 22,500-22,800 zone.
Investors will eye several stock market triggers in the last week of the month including domestic and global macroeconomic data, auto sales figures, crude oil prices, foreign capital inflow, along with global cues.
Markets remained volatile in the past five days but managed to extend their winning streak for the second consecutive week, ending with a gain of nearly a per cent. After the initial rise, mixed global cues combined with profit taking in select heavyweights capped the momentum.
Global indices surged higher as the positive momentum was largely influenced by the tech rally following US chipmaking giant Nvidia's steady rise in market valuation after earnings, which also buoyed sentiments in Indian markets.
The domestic benchmark indices, Nifty and Sensex, continued to oscillate in a narrow range till the end and finally settled at 22,212.70 and 73,142.80 respectively. On the sectoral front, the majority ended in the green wherein realty, FMCG and metal were among the top performers.
However, the broader indices failed to match the move and ended on a flat note. The Nifty 50 and BSE Sensex gained 0.78 per cent and one per cent, respectively, for the week, despite falling 0.02 per cent each on Friday.
Despite a volatile week amid mixed global cues, the benchmark Nifty 50 index hit record highs in all five sessions, buoyed by a rise in heavyweight financials. The broader, domestically-focussed small-caps shed 0.12 per cent this week, while mid-caps added 0.30 per cent, both underperforming the benchmarks.
"The domestic market paused momentarily after reaching another record high earlier in the day, driven by positive signals from global markets. Notably, the capital goods and industrial sectors showed strength, supported by advancements in manufacturing and services,'' said Vinod Nair, Head of Research, Geojit Financial Services.
‘’As the earnings season winds down, the market is eagerly awaiting new catalysts however rallying on the pre-election momentum. Concerns linger over rising crude oil prices, surging US bond yields, and stretched valuations, likely prompting continued selling by FIIs,'' added Nair.
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 stock action along with domestic and global cues.
Overall, analysts say that the trend remains positive, however, expect volatility to remain high due to the scheduled expiry of February month derivatives contracts. Going ahead, indications are in favor of Nifty 50's steady up move toward the 22,500-22,800 zone and select index majors may offer the required thrust. Experts advice investors to continue with the “buy on dips" strategy and focus on stock selection.
Here are the key triggers for stock markets in the coming week:
Macro Data, Auto Sales:
On the macroeconomic front, India's gross domestic product (GDP) for the third quarter will be released on February 29, 2024. The infrastructure output data and fiscal deficit will also be released on the same day. Auto stocks will be in focus as auto companies will announce their monthly auto sales numbers for February on March 1, 2024.
This week stock markets may experience some direction and increased volatility ahead of the February month F&O expiry and the alongside the MSCI rebalancing - due on Thursday, according to analysts.
6 new IPOs, 5 listings to hit D-Street:
In the mainboard segment, Exicom Tele-Systems IPO and Platinum Industries IPO open for subscription on February 27, while Bharat Highways InvIT IPO opens on February 28. Among the ongoing issues, GPT Healthcare IPO will close for bidding on February 26.
In the SME segment, Owais Metal and Mineral Processing IPO will open for subscription on February 26, Purv Flexipack IPO will open on February 27, and M.V.K. Agro Food IPO will open on February 29. Among the ongoing issues, Sadhav Shipping IPO will close for bidding on February 27.
Among listings, shares of Juniper Hotels will debut on stock exchanges BSE, NSE on February 28 and shares of GPT Healthcare IPO will get listed on February 29. Also, shares of Zenith Drugs and Deem Roll Tech will debut on NSE SME on February 27. Also, shares of Sadhav Shipping may get listed on NSE SME on March 1.
FII Activity:
Foreign institutional investors (FIIs) were sellers for three out of five sessions last week, and the total divestment stood at ₹1,939.4 crore, while domestic institutional investors (DIIs) were buyers for four out of five sessions, with a total investment of ₹3,532.82 crore, according to stock exchange data.
‘’Investors are cautious on the banking sector due to credit demand moderating and struggle to raise deposits. Other sectors which came on the seller list for FII are construction and telecom. The sectors which stay bullish are Healthcare, IT, consumer services and auto. It is expected that FIIs flow in India may increase amid strong earnings and investors globally are cautious about Chinese equities,'' said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
Foreign portfolio investors (FPIs) continued January's selling streak in Indian markets, however the outflows have sharply declined in February. According to market experts, FPIs continue buying in primary markets and debt, counterbalanced the total net sell-off amount so far in February. However, the capital outflow by FPIs stands at ₹26,168 crore so far in 2024.
FPIs have sold ₹424 crore worth of Indian equities and the total inflow stands at ₹18,633 crore as of February 23, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.
"An interesting feature of the FPI trend is the decline in FPI equity outflows despite the rising bond yields in the US. Normally when the US 10-year yield rises above 4.15 per cent, the FPIs sell heavily. But this is not happening now. Since the DIIs, HNIs and retail investors are the dominant players now and their sustained buying is pushing the market to newer records, FPIs have taken a backseat'' said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Global Cues:
In the coming week, market might take a pause ahead of various global economic data releases. US would be reporting its Q4 GDP numbers along with initial jobless claim, PCE data and consumer confidence for the month of February. GDP numbers and initial jobless claims are likely to impact the movement of US bond yields.
Investors will keep an eye on the global macro data, along with the movement of rupee against the US dollar index, crude oil prices and any comments by US Federal Reserve officials. The US markets will be closely watched after artificial intelligence (AI) chipmaking bellwether Nvidia sparked a global tech rally last week after reporting strong quarterly earnings.
‘’Participants should keep a close watch on the performance of the global indices, especially the US for cues. After the marginal dip, the US benchmark index, the Dow Jones Industrial Average (DJIA) has resumed the uptrend and also crossed a new milestone of 39,000. With a strong base of around 38,400, we expect the prevailing tone to continue in the index and that could also help our markets to maintain the positive bias,'' said Ajit Mishra, SVP - Technical Research, Religare Broking Ltd.
Oil Prices:
Oil prices fell nearly three per cent lower in the previous session and posted a weekly decline after a US central bank policymaker indicated interest rate cuts could be delayed by at least two more months. Federal Reserve policymakers should delay US interest rate cuts by at least another couple of months, said Fed Governor Christopher Waller, which could slow economic growth and curb oil demand.
Brent crude futures settled down $2.05, or 2.5 per cent, at $81.62 a barrel, while US West Texas Intermediate crude futures (WTI) were down $2.12, or 2.7 per cent, to $76.49. For the week, Brent declined about two per cent and WTI fell more than three per cent. However, indications of healthy fuel demand and supply concerns could revive prices in the coming days.
Corporate Action:
Shares of several companies, including Natco Pharma, NMDC, Birla Precision Technologies, among others will others will trade ex-dividend in the coming week, starting from Monday, February 26. Some other companies will also trade ex-bonus and ex-split in the coming week. Bajaj Auto will declare a buy back of shares on February 29. Check full list here
Technical View:
‘’Nifty has respected the short term moving average i.e. 20 DEMA in the recent dip however a mixed performance of the index heavyweights is keeping a check on momentum,'' said Religare Brokings' Ajit Mishra.
‘’Going ahead, indications are in favor of a steady up move toward the 22,500-22,800 zone and select index majors may offer the required thrust. On the downside, the 21,550-21,900 zone would offer support in case of any profit taking. Participants should maintain a “buy on dips” approach with a focus on stock selection,'' added Mishra.
‘’From a technical standpoint, Nifty has broken out of a 45-day consolidation period, indicating potential upside towards the 22,500 level, according to Santosh Meena, Head of Research, Swastika Investmart Ltd. ‘’Immediate support lies at the 20-day moving average (DMA) around 21,900, while the 50-DMA at 21,700 serves as a key support level,'' he said.
‘’Analyzing derivatives, Nifty currently lacks major call writing until the 23,000 mark, while put writers at the 22,000 level exhibit confidence. In Bank Nifty, there's a tug-of-war between call and put writers at the 47,000 strike price,'' added Meena.
The Bank Nifty index maintained its robust momentum, breaking past the 46,500 level, which is now established as a formidable support, according to Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.
‘’Any retracement towards this support zone presents an ideal opportunity to initiate long positions, targeting an upside of 48,000. The immediate hurdle for the index is situated at 47,100, and a conclusive break above this level would signify a resumption of the uptrend toward the mentioned targets of 48,000,'' added Shah.
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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