Week Ahead: Q4 Results, US Fed Policy, Auto sales, global cues among key market triggers this week

The first month of the new financial year 2024-25 (FY25) is drawing to a close this week with the US Federal Reserve policy meeting outcome. The month of May will also begin this week which will set the tone of the upcoming high-stakes general elections 2024. Investors will eye several stock market triggers this week including the January-March quarter results for fiscal 2023-24 (Q4FY24), auto sales numbers, domestic and global macroeconomic data, US Fed interest rate decision, Israel-Iran conflict, crude oil prices, and global cues.

Indian stock markets rebounded after two weeks of profit-taking and gained over a per cent. The week kicked off on an upbeat note, buoyed by positive cues from the global markets. However, volatility ensued as the week progressed, with the markets grappling with uncertainties surrounding mixed earnings.

A sharp surge on Thursday further eased concerns but profit taking in the final session capped the momentum. However, Friday saw a correction at higher levels. The real strength came from the broader market, where mid-cap and small-cap indices surged by around four per cent. Volatile global cues and selling by foreign investors capped gains in large-cap stocks.

Also Read: Nifty 50 May series: 4 stocks where investors can park their money; do you own?

Eventually, both domestic equity benchmarks, Nifty 50 and Sensex, settled at 22,419.90 and 73,730.10 levels respectively. All the key sectors participated in the recovery wherein realty, metal and pharma posted strong gains. Kotak Mahindra Bank tumbled 10.27 per cent, its worst week in nearly four years after the Reserve Bank of India (RBI) barred the private lender from taking new digital clients and issuing credit cards. On a weekly basis, the BSE benchmark advanced 641.83 points or 0.87, and the NSE Nifty climbed 272.95 points or 1.23 per cent.

“Relief from Middle East tensions, coupled with a correction in oil prices, and a bolstered Indian economic outlook fuelled by elevated composite PMI data from manufacturing and service sectors, propelled a market rally. However, the unexpected decline in US GDP and a surge in the US core PCE price index triggered a global stock market downturn on the last trading day,” said Vinod Nair, Head of Research, Geojit Financial Services.

The domestic market lagged its Asian peers as Q4 earnings remained largely subdued, with weak results from IT and a few index heavyweights also disappointing. The expectation of an improvement in asset quality and the RBI’s regulatory ecosystem for private banks led the PSU banks to outperform.

Also Read: Federal Bank is Religare’s pick of the month for May, 13% upside seen at TP of ₹176; should you buy?

Nair expects a consolidation in the near term, leading investors to seek refuge in bonds and gold. The upcoming US Fed policy, US nonfarm payroll data will dictate the global market, while the ongoing Q4 earnings reports are poised to influence the domestic market dynamics, according to the market expert.

This week, a few initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segment, however overall buzz is subdued in the primary markets. The week will be critical from domestic and technical point of view as investors will global indicators and the latest corporate results.

Overall, analysts expect volatility to continue over the ongoing quarterly results and said that Nifty 50 has a robust support in the range of 22,200-22,300. Experts advise traders to focus on performing sectors and stock-specific action for good opportunities.

Here are the key triggers for stock markets in the coming week:

Q4 Results:

This week, the ongoing Q4FY24 earnings will be one of the main factors in driving the market movement. Some major companies will announce their quarterly results such as Dabur, Federal Bank, Adani Enterprises, Adani Ports, Tata Technologies, Titan, Adani Power, UltraTech Cement, among others.

Auto sales, US Fed Policy

Auto stocks will be in focus as auto companies will announce their monthly auto sales numbers for April on May 1, 2024. The upcoming week will also place a significant focus on monetary policy decisions of central banks, as the US Federal Reserve will begin its two-day policy meeting on April 30.

The US Fed will announce its interest rate decision after its two-day policy meeting on May 1, 2024. According to most analysts, the US Federal Reserve will leave its benchmark overnight interest rate unchanged. While no rate cuts are expected, the committee’s commentary will be closely scrutinized, according to Santosh Meena, Head of Research, Swastika Investmart Ltd.

4 new IPOs, 4 listings to hit D-Street

From the SME segment, Storage Technologies & Automation IPO, Amkay Products IPO, Sai Swami Metals & Alloys IPO will open for subscription on April 30. Slone Infosystems IPO will open for bidding on May 3.

Among listings, shares of JNK India will get listed on stock exchanges BSE, NSE on April 30. Shares of Varyaa Creations, Shivam Chemicals, and Emmforce Autotech will also debut on BSE SME on April 30.

FII Activity

Foreign institutional investors (FIIs) were net sellers last week stocks worth ₹14,704 crore and domestic institutional investors (DIIs) were net buyers buying stocks worth ₹20,797 crore. Foreign portfolio investors (FPIs) have turned into net sellers in Indian equities and debt markets ever since reducing their momentum of buying with the onset of the new fiscal 2024-25 (FY25).

FPIs have sold ₹6,304 crore worth of Indian equities and the total outflow stands at ₹13,144 crore as of April 26, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. The total debt outflows stands at ₹10,640 crore so far this month.

According to market analysts, the major trigger for the renewed FPI selling, in both equity and debt, is the sustained rise in US bond yields. The 10-year bond yield now stands at around 4.7 per cent which is attractive for foreign investors.

Core inflation in US jumped to 3.7 per cent which has reduced the prospects of an early rate cut by the US Federal Reserve. This will keep yields high triggering more FPI outflows in both equity and debt, according to Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Global Cues

The outlook for the market will be guided by the major domestic and global economic data. Economic data releases from China and the US, along with movements in the global currency market, will be the major factors to consider. The movement of US dollar, US bond yields, and crude oil prices will also dictate market movement. US markets will stay in focus due to the Fed rate decision.

‘’We expect volatility to remain high citing mixed indications from the global front, especially the US markets. Though the US benchmark index, the Dow Jones Industrial Average (DJIA) has rebounded of late, we need sustainability above 38,700 levels to reclaim strength else profit taking will resume. Besides, earnings announcements would further add to the choppiness across sectors,” said Ajit Mishra, SVP – Research, Religare Broking Ltd.

Oil Prices

International crude oil prices settled higher after consolidation on Friday, banking on support from geopolitical tensions in the Middle East. However, a sharp US dollar and higher-than-expected US inflation diminished hopes that the US Federal Reserve would cut interest rates soon, limiting gains in prices. Brent crude futures last settled 49 cents higher, or 0.55 per cent, to $89.50 per barrel, while the US West Texas Intermediate crude futures settled 28 cents, or 0.34 per cent higher, to $83.85 per barrel, according to news agency Reuters.

Corporate Action

In the coming week, shares of some companies including CRISIL Ltd, ABB India, 360 One WAM, among others will trade ex-dividend starting from Monday, April 29. With these companies, some other firms will also trade ex-split, ex-rights, and ex-bonus, according to data on the BSE. Check full list here

Technical View

The markets have been gradually climbing, reflecting a cautious optimism amid mixed signals. Nifty has surpassed the short-term moving average i.e. 20 DEMA, indicating a strengthening trend and we anticipate robust support in the 22,000-22,300 range, in case of any downward movement.

‘’However, the upper boundary of Nifty’s upward channel, approximately 22,750-22,900, could limit further gains. We advocate a prudent strategy of buying on market declines, with a focus on performing sectors/themes viz. metal, auto, defense, power, and select banking for potential opportunities,” said Religare Brokings’ Ajit Mishra.

On the technical front, both Nifty and Bank Nifty faced resistance at crucial levels. Nifty couldn’t hold above 22,530, leaving the 22,400-22,200 zone as immediate support, said analysts. ‘’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,” said Swastika Investmarts’ Santosh Meena.

In Bank Nifty, the absence of sustained buying interest was notable, accompanied by a lack of support from the momentum indicator divergence, hindering the upward momentum. ‘’This suggests a potential consolidation phase in the short term. Key focus rests on the pivotal level of 47,500, while 48,000 holds significant importance as a crucial barrier. A breach below 48,000 could significantly shift sentiment, potentially prompting a retest of levels around 47,500 to 47,250, or the 50-day simple moving average,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

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