Week Ahead: Inflation data, FII activity, global cues among key market triggers this week
- Samvat 2080 Special: Analysts believe that markets will witness an upward trajectory with rotational buying, if the Nifty 50 holds over 19,200 in the upcoming holiday-shortened week.
Investors will eye a host of stock market triggers in November's third week including the last set of the second quarter results of current fiscal (Q2FY24), domestic and global macroeconomic data, foreign capital inflow, and global market cues.
Domestic markets began the week on an upbeat sentiment but the benchmarks opened with an upside gap but muted global cues capped the movement thereafter. The performance was rangebound mid week, however Nifty 50 and Sensex, settled closer to the week’s high at 19,425.30 and 64,904.60 respectively on the last day.
On a weekly basis, the frontline indices logged their second straight weekly straight supported by declining US bond yields and lower crude oil prices. The BSE benchmark advanced 540.9 points or 0.84 per cent, and the Nifty rose 194.75 points or 1 per cent.
The more domestically-focused small- and mid-caps logged 3.09 per cent and 2.89 per cent weekly gains, respectively, posting their best week in two months amid persistent retail inflows.
The Nifty smallcap index marked a historic high, surging over 3 per cent during the week, fueled by a record level of systematic investment plans (SIP) reaching approximately ₹17,000 crore per month.
On Friday, the domestic equity benchmarks Sensex and Nifty 50 settled higher on Friday supported by fag-end buying in select heavyweights, including HDFC Bank and ITC, despite weak global cues.
Nifty 50 ended at 19,425.35, up 30 points, or 0.15 per cent, while the 30-share Sensex pack ended 72 points, or 0.11 per cent, higher at 64,904.68. Mid and smallcaps outperformed the benchmarks. The BSE Midcap index rose 0.33 per cent while the Smallcap index ended with a gain of 0.38 per cent.
"Reflecting the mixed global sentiments on account of a more than expected fall in Chinese exports, highlighting a continued slowdown in global trade, the Indian market is mired to a range bound trend. The Nifty index was not able to breach above the key level of 19,500…Mid- and small caps are back in favour after the recent fall, led by retail activities & good corporate results,'' said Vinod Nair, Head of Research at Geojit Financial Services.
Going forward, a busy week awaits the primary market as a few new initial public offerings (IPO) and listings are slated so far across the 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 global cues along with key domestic economic data.
Overall, analysts believe that Samvat 2080 will open on a strong note and markets will witness an upward trajectory with rotational buying, if the Nifty 50 holds over 19,200 in the upcoming holiday-shortened week. Geopolitical risks persist due to the Israel-Hamas war, but so far, it has had limited impact on the market movement.
Here are the key triggers for stock markets in the coming week:
Domestic Macroeconomic Data:
On the macroeconomic front, India's consumer price index (CPI)-based inflation or inflation rate for October is scheduled for release on November 13, followed by the wholesale price index (WPI) -based inflation on November 14.
Fitch upgraded India’s GDP forecast for 2023 to 6.2 per cent from 5.5 per cent mainly due to improvement in the employment rate, better working-age population and higher labour productivity. According to Fitch, among the world’s top 10 emerging economies, India has the highest growth potential.
Q2 Results:
Most of the companies have reported their Q2FY24 earnings. Auto, BFSI, capital goods and oil & gas posted good growth in revenue and profits as they dominated the sept quarter earnings season. However, IT and FMCG sectors posted muted growth and failed to impress the markets.
BFSI earnings were in line due to steady loan growth and robust asset quality despite pressure on margins. The telecom sector witnessed a slowdown because of high capex, while the agriculture sector was impacted due to subdued demand and the cost of inflation.
The last set of Q2FY24 numbers will be released in the coming week. Companies such as Grasim Industries, Manappuram Finance, MMTC, PC Jeweller, Indiabulls Housing Finance, Container Corporation of India (CONCOR), NMDC, among several others.
1 new IPO, 3 new listings to hit D-Street:
Arrowhead Seperation Engineering IPO: The SME IPO opens for subscription on November 16, 2023 and closes on November 20, 2023. Arrowhead Seperation Engineering IPO is a fixed price issue of ₹13.00 crore. The issue is entirely a fresh issue of 5.58 lakh shares.
Listings: Protean eGov Technologies will get listed on stock exchanges BSE and NSE on November 13, ASK Automotive will likely get listed on November 15 and the SME IPO of Baba Food Processing will get listed on NSE SME on November 16. Check details here
FII Outflow:
Foreign institutional investors (FIIs) continued selling on Friday although the volume moderated on the back of hawkish stance by the US Federal Reserve as well as declining crude oil prices. FIIs offloaded ₹261,81 crore in Indian equities during the previous session, while domestic institutional investors (DIIs) tried to counterbalance the sell-off and emerged net buyers as they infused ₹823 crore.
‘’Despite persistent selling by FIIs, who sold approximately ₹3105.30 crore in the cash segment, investor sentiment remained robust. This buoyancy is attributed to the growing anticipation that the US Federal Reserve is unlikely to implement interest rate hikes throughout the remainder of the year,'' said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
Foreign portfolio investors (FPIs) have sold ₹5,806 crore worth of Indian equities and the total inflow stands at ₹1,525 crore as of November 10, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.
"The FPI selling trend which started in September continued in October and is showing no signs of reversing in November even though the intensity of selling has come down this month,'' said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FPIs are looking for the safety of the risk-free US bond yields where the 10-year is yielding around 4.64 per cent, according to the analyst.
Global Cues:
Internationally, all eyes are on the meeting between US President Joe Biden and Chinese President Xi Jinping in California on November 15, 2023. Concurrently, China will unveil its industrial production data on the same day, and US retail sales figures are slated for release on November 14.
Investors would keep a close watch on global macroeconomic data, global crude oil prices, movement of rupee against dollar, and US bond yields for the coming week.
‘’Though cues from the Fed Chair's speech have reduced the likelihood of a rate hike in the near term, leading to an ease in US treasury yields and calming the market. However, headline inflation remains above the US central bank’s target,'' said Geojits' Vinod Nair.
Some major economic numbers that will dictate the market trend are US OPEC report, crude oil inventories, US CPI inflation data, PPI, retail sales, initial jobless claims, building permits, UK unemployment and inflation data, Eurozone GDP.
‘’The performance of the global indices, especially the US markets, will be on participants’ radar for cues. The Dow Jones Industrial Average (DJIA) spent the entire week in a range but finally surpassed the hurdle of 34,200 on Friday. Now, sustainability above that zone could trigger the next leg of recovery, which may help in ending the consolidation in our markets,'' said Ajit Mishra, SVP - Technical Research, Religare Broking.
Oil Prices:
Oil prices gained about 2 per cent on Friday, November 11, as Iraq voiced support for oil cuts by the Organization of Petroleum Exporting Countries and its allies (OPEC+) ahead of a meeting in two weeks and as some speculators covered massive short positions ahead of weekend uncertainty.
Still, prices settled with weekly losses of 4 per cent, their third straight weekly decline. Brent futures rose $1.42, or 1.8 per cent, to settle at $81.43 a barrel on Friday, while US WTI crude rose $1.43, or 1.9 per cent, to settle at $77.17, according to news agency Reuters.
Brent and WTI notched their third straight weekly losses for the first time since May, although both benchmarks exited technically oversold territory. Crude oil prices have experienced a significant downturn, plunging by nearly 10 per cent over the past eight days.
On Wednesday, the price of Brent crude dropped below $80 per barrel for the first time since July, driven by mounting concerns about demand due to the lackluster economic outlook in China and Europe. OPEC+ will meet for its next scheduled oil output policy decision on November 26.
Analysts at Capital Economics said OPEC+ might cut supply further if prices continue to fall. "We are sticking with our forecast of Brent ending both this year and next year at around $85 per barrel," the research firm said in the note.
Corporate Action:
Shares of several companies will trade ex-dividend in the coming week including Power Grid Corporation of India, Indian Railway Catering and Tourism Corporation (IRCTC), Indraprastha Gas Ltd (IGL), United Spirits, MRF, among others will trade ex-dividend in the coming week, starting from Monday, November 13. Additionally, shares of Atal Realtech Ltd will undergo a stock split from ₹10 to ₹2 on November 16. Check full list here
Technical View:
From a technical standpoint, the Nifty faces a crucial resistance zone at 19,500–19,550, according to analysts. A breakthrough above this level could trigger short covering, propelling the index towards the 19,800–20,000 range.
‘’Conversely, 19,200 stands out as a robust immediate support level, and any weakness is only anticipated if this level is breached, potentially leading to a decline towards the 19,000–18,800 zone,'' said Santosh Meena, Head of Research, Swastika Investmart.
Religare Brokings' Ajit Mishra said, ‘’We reiterate a positive view on Nifty until it holds 19,200 and suggests focusing on stock selection. A decisive break above 19,500 would trigger the next leg of up move towards 19,850 levels. While all sectors are witnessing rotational buying, we feel the contribution of banking would be critical for momentum else the rise could be gradual.''
Bank Nifty discovered support at the 21-day Moving Average (DMA) before surging towards the day's peak. ‘’The prevailing trend indicates a potential movement of the index towards 44,000/44,200. At the lower end, 43,500 is expected to serve as robust support. A breach below 43,500 could potentially lead the index towards the range of 43,000-42,800,'' said Rupak De, Senior Technical Analyst at LKP Securities.
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.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
- Top Gainers
- Top Losers
- 52 Week High