The market remained in control of bears for the third consecutive week ended April 29 but the losses were capped at less than half a per cent amid nervousness in global counterparts and mixed March quarter earnings. Nervousness in global markets combined with a mixed start of Q4 earnings on the domestic front kept volatility high throughout the week. The BSE Sensex lost 136 points to close the week at 57,061, and the Nifty50 fell 69 points to 17,103, but the pressure was more in broader markets as the Nifty Midcap 100 and Smallcap 100 indices have declined 1.4 per cent and 2.7 per cent respectively.
Overall, it was another week of consolidation for the market and the same kind of trend is expected to continue in coming holiday-shortened week too, given the ongoing geopolitical tensions, and elevated oil prices keeping inflation concerns intact, though the market would first react to auto sales numbers on Monday and as we move forward, would focus on Fed interest rate decision, LIC IPO, and economic data points, experts say, adding the stock-specific action is expected to be more due to corporate earnings season.
“Participants should limit positions and focus on identifying the sectors/themes which are showing resilience amid the consolidation bias. Investors, on the other hand, shouldn’t look much into the short-term fluctuations and keep a close watch on the earnings for cues,” said Ajit Mishra, VP Research. Religare Broking.
March Quarter Earnings
As we will enter the fourth week of March quarter earnings season, nearly 200 companies will release quarterly earnings scorecard including prominent names like Reliance Industries, HDFC, Britannia Industries, Hero MotoCorp, Tata Steel, Titan Company, and Kotak Mahindra Bank.
LIC IPO
The initial public offer (IPO) of Life Insurance Corporation (LIC) will also open from May 4 for subscription. The government will be selling Rs 20,557 crore worth of shares in the IPO. Considering the mammoth issue size, the IPO is expected to test investors’ appetite and the liquidity routed towards the IPO can mildly influence secondary markets.
Most of experts expect the demand to the LIC IPO from every category of investors. Half of the offer is reserved for qualified institutional buyers, 15 per cent for non-institutional bidders and the remaining 35 percent for retail investors.
Apart from LIC IPO, the share allotment of Campus Activewear and Rainbow Children’s Medicare will get finalised in later part of next week.
US Fed Meet
US Fed will decide on its monetary policy in the coming week. Markets are discounting a 50 bps rate hike this time and the focus would be on their commentary on the quantum of rate hikes ahead. If there is any deviation in the quantum of rates, the market will react accordingly.
Apart from FOMC meeting, focus will also be on Bank of England wherein experts expect 25 bps hike. “BOE has been raising interest rate since December and is expected to further hike by 0.25 percent next week. Currency movement will be dependent on BOE’s stance on future hikes as well as balance sheet reduction,” Ravindra Rao, VP – Head Commodity Research at Kotak Securities said.
Russia Ukraine War
The war between Ukraine and Moscow that seems to be endless is expected to keep the equity markets volatile and make inflation concerns alive for more period of time, as reports indicated that the new phase of war is likely to have threatened by Russia, hence analysts feel both sides seem prepared for prolonged conflict that could extend beyond the battlefield, while the damage from the war that entered into nineth week is mounting on Ukraine.
FII Selling
The FII outflow is another factor that keeping a cap on the markets upside, though domestic institutional investors have consistently been trying hard to compensate the FII outflow. Experts remain confident that FII flow will be back to India in second half of 2022 given the economy is much more resilient.
Macro Data
Traders will also react to a host of macro data that will be released during the week. This includes PMI data, export-import prelim data and loan and deposit growth data.
Nifty Technical Outlook
Santosh Meena, Head of Research, Swastika Investmart Ltd., “Technically, the Nifty is stuck in the range of 16,850-17,450 and any decisive move from this band will dictate the further direction of the market. If the Nifty slips below the 16850 level then there will be a risk of any major correction where 16,600/16,400 are the next important support levels. On the upside, 17,300 is an immediate resistance while if Nifty manages to cross the 17,450 level then 17,600 will be the next hurdle. Banknifty has a critical support zone of 35,500-35,000 and if it slips below this zone then there will be a risk of a move towards the 34,000 level. On the upside, 36,700-37,000 is a critical supply zone; above this, we can expect a short-covering rally.”
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