stock market outlook: US Fed FOMC, Q4 earnings, FII action among 10 factors to set D-Street mood this week

Nifty ended with weekly gains of 2% amid significant volatility. On Friday it ended in the red breaking its five sessions gaining streak. When markets resume trading on Monday, a host of important domestic and global events lined-up during the holiday-truncated week are likely to impact them.

Equity markets will be shut for trading on May 1, Wednesday on account of Maharashtra Day.

Commenting on last week’s action, Santosh Meena, Head of Research, Swastika Investmart said that Nifty surrendered most of its gains on Friday dragged by US inflation concerns, geopolitical tensions and selling by Foreign Institutional Investors (FIIs).

Going ahead, FII activity remains a key factor to watch especially considering their already low holdings in the Indian market, he remarked.

Factors that are likely to impact movement when markets reopen this week:

US Fed FOMC
The Federal Reserve’s rate setting committee will begin a two-day meeting on April 30, Tuesday and the outcome of the meeting will come on May 1 where the Federal Open Market Committee (FOMC) is expected to leave rates unchanged. The Street will be keeping a track on the Fed commentary on the timing of the rate cut amid expectations of a 25 bps cut in June policy.

Q4FY2024 earnings
Over 200 BSE listed companies will announce their March quarter earnings this week and the most followed results are likely to come from Adani Enterprises, Adani Ports, Dabur India, Britannia Industries, Titan, Tata Technologies, Avenue Supermarts, Kotak Mahindra Bank, Can Fin Homes, Tata Chemicals, Trent, UCO Bank, UltraTech Cement, Adani Energy Solutions, Adani Total Gas, Adani Power, Ambuja Cements, Adani Wilmar.

The markets will also react to earnings declared by ICICI Bank, Yes Bank, RBL Bank, IDFC First Bank and others.

US Markets
US stocks ended Friday with strong gains. While Dow 30 ended at 38,239.70, up by 153.86 points or 0.40%, S&P 500 settled at 5,099.96, higher by 51.54 points or 1.02%. Meanwhile, Nasdaq Composite gained by over 316.14 points or 2.03% to end at 15,927.90 on Friday.

When Indian markets reopen on Monday, they will take cues from the Friday closing of the US markets. They will also track movement in GIFT Nifty futures on Monday. The latter is an early indicator of movement in the Nifty50.

Rupee Vs Dollar
The Indian rupee closed little changed on Friday but logged its strongest week-on-week rise in nearly three months following a recovery from its all-time low hit last week. The rupee ended at 83.34 against the U.S. dollar, barely changed from its previous close at 83.3150. The currency logged a weekly rise of 0.15%, its strongest since the week ended Feb. 2.

The rupee had dropped to its record low of 83.5750 last week but has since recovered following intervention from the Reserve Bank of India and the ebbing of concerns about an escalation in the Middle East conflict.

In the near term, the domestic currency is expected to hold its prevailing range with potential gains capped near 83.20, Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services, said.

The dollar index was at 105.6, while most Asian currencies were range bound.

Corporate Action
Amid top corporate actions May 2, Thursday will be the ex-date and record date for 1:1 rights issue; subdivision Bhagiradha Chemicals & Industries; for interim dividends of 360 One WAM, CRISIL. May 3, Friday will be the ex-date and record date for Sanofi India. On May 3, ABB India will hold its AGM.

Technical Factors
In the holiday truncated week, monthly auto sales numbers and low voter turnout in the second phase is also likely to play on the market sentiments.

On the technical charts, Meena of Swastika Investmart sees both Nifty and Bank Nifty facing resistance at crucial levels. “Nifty couldn’t hold above 22,530, leaving the 22,400-22,200 zone as immediate support. A major support level lies at the 100-day moving average (DMA) around 21,900. If Nifty surpasses 22,620, the May series high, a potential rally towards 23,000 becomes possible. Otherwise, expect continued volatility within the 21,800-22,500 range,” this expert said.

Bank Nifty, though relatively stronger, also struggled to stay above 48,600, he opined as he sees a sustained breakout above this level could trigger a move towards 50,000. Immediate support sits at 47,800, with a crucial support level at 47,200 below that, Meena said.

FII / DII Action
The foreign institutional investors (FIIs) were net sellers of Indian equities and off-loaded shares worth Rs 3,408.88 crore on Friday while the domestic institutional investors (DIIs) were net buyers at Rs 4,356.83 crore.

The performance of domestic and foreign investors will have an impact on the way movement happens in the domestic stock markets.

IPO Action
After a sole IPO of JNK India last week, the primary market is back to hibernation in the mainboard segment as there are no fresh public offers opening next weekend. However, 3 SME issues and 4 listings are still going to grab investors’ attention. The public offer of JNK India, which received a healthy subscription of over 28 times, will also see its shares listed at the bourses.

Crude Oil
Oil prices remain critical for markets with their impact on inflation on the rate trajectory of global central banks including India’s. India’s oil minister on Friday said that current market volatility is being caused by the OPEC producer group rather than the conflict in the Middle East. Street will be tracking price movement next week even as the Fed is to announce its policy.

Brent crude futures settled at $89.35 a barrel on Friday, gaining $0.370, or 0.42% while the US WTI contract settled at $83.68 a barrel, rising $0.09 or 0.11%.

On MCX, the April crude oil contract settled at Rs 6,995, up by Rs 4 or 0.06%.

Bond Yields
Indian government bond yields ended marginally lower on Friday, after a choppy week as focus remained on U.S. Treasuries and oil prices. The benchmark 10-year yield ended at 7.1870%, following its previous close at 7.2061%. The yield fell four basis points for the week, after rising an aggregate 16 bps in the last three weeks.

“Bonds have been quite resilient to sharp volatility in global risk free rates and higher crude prices. That may continue to be the case as long as crude prices do not break out, and more so with U.S. bond markets already pricing out cuts this year,” Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership, said.

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)