As April fast draws to a close, investors will keenly eye several stock market triggers in the fourth week of the month with the ongoing January-March quarter results for fiscal 2023-24 (Q4FY24), domestic and global macroeconomic data, developments around general elections 2024, impact of the Israel-Iran conflict, crude oil prices, US bond yields, and global cues.
Domestic markets edged lower amid excessive volatility and lost over one and a half per cent, tracking feeble global cues. The tone was negative from the beginning, which further deteriorated with a decline in world indices however rebound on Friday trimmed some losses.
Benchmark indices Nifty 50 and Sensex, settled at 22,147 and 73,088.33 levels respectively. Nifty 50 and Bank Nifty snapped their four-week rising streak amidst escalating geopolitical tensions in the Middle East.
US-rate sensitive IT stocks dropped 4.71 per cent over the week, their second worst week in 12 months, on fading hopes of early US rate cuts and softer reports from market leaders TCS and Infosys. Overall, all the key sectors felt the heat wherein IT, realty and banking were among the top losers. The broader indices also witnessed pressure and shed in the range of 1.4 per cent-2.7 per cent.
‘’Optimism prevailed with hopes of limited prospects of escalation in Iran-Israel tensions. However, the domestic market failed to offset the losses sustained throughout the week. Globally, caution persisted as the situation in the Middle East remains fragile,” said Vinod Nair, Head of Research, Geojit Financial Services.
‘’Mid- and small-cap stocks also corrected, highlighting concerns over premium valuations. Muted Q4 earnings expectations and weak IT results could extend the consolidation. Large caps could offer solace for investors, given earnings stability,” added Nair.
Coming to primary markets, a few initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segment. The week will be critical from domestic and technical point of view as investors will eye economic indicators and the latest corporate results.
Overall, analysts expect volatility to continue over quarterly results and said that Nifty 50 needs to have sustainability at 22,300 before it can move to recovery, Experts advise traders to prefer a hedged approach and wait for clarity.
Here are the key triggers for stock markets in the coming week:
Q4 Results, macro data
The ongoing Q4FY24 earnings season will be a major factor in driving the market movement. Some major companies will announce their quarterly numbers such as Reliance Industries, Bajaj Finance, Tech Mahindra, Nestle India, HCL Technologies, Maruti Suzuki, among others. On the macroeconomic front, India’s purchasing managers indices (PMI) numbers will be released.
4 new IPOs, 5 listings to hit D-Street
In the mainboard segment, JNK India IPO will open for subscription while Vodafone FPO will conclude on April 22. In the SME segment, Varyaa Creations IPO, Emmforce Autotech IPO, and Shivam Chemicals IPO will open for bidding.
Among listings, shares of Vodafone FPO will debut on BSE, NSE. From SMEs, shares of Greenhitech Ventures, Birdy’s IPO, Ramdevbaba Solvent IPO, and Faalcon Concepts IPO will debut on SME platforms this week.
FII Activity
Foreign institutional investors (FIIs) were net sellers while domestic institutional investors (DIIs) were buyers last week, according to stock exchange data. Foreign portfolio investors (FPIs) have tuned net sellers in Indian markets due to high US inflation print in March and the surging US bond yields.
‘’A major trend in FPI activity this month is that FPIs have turned sellers into debt after sustained buying for several months. In April through 20th FPIs sold debt worth ₹12,885 crore. This again is the consequence of the rising US bond yields and the concern regarding rupee depreciation,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The hotter-than-expected US inflation has cut back rate cut hopes. This along with the consequent spike in bond yield (the 10-year rising above 4.6 per cent) led to big selling in the Indian cash market, according to the market expert.
Global Cues, Iran-Israel conflict
Escalation in the conflict between Iran and Israel led to profit booking from the markets with Israel attacking Iran causing uncertainty and fear in the market. Major US indices S&P 500 and Dow marked six straight daily declines the longest losing streak since October 2022.
‘’A potential delay of a US rate cut due to higher-than-expected inflation, robust retail sales, and elevated oil prices invoked subdued sentiments. This was evident through notable upticks in the dollar index, US bond yields, and the price of yellow metal,” according to Geojits’ Vinod Nair.
This week also promises to be crucial for the market as ongoing worries of Iran-Israel conflict emerge. If tensions escalate significantly, there a risk of panic selling and increased volatility across global stock markets, according to Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.
With April month coming to an end purchasing managers indices (PMI) numbers for major countries across the globe including the US and the Eurozone will come out. Advance gross domestic product (GDP) numbers of the US and company earnings will be other major events that will guide the market.
On the macroeconomic front, People’s Bank of China will announce loan loan prime rate for one year and five years on April 22, 2024. The Bank of Japan will announce its interest rate decision on April 26, 2024.
The US Unemployment Claims will be announced on April 25, 2024, and movements in US bond yields and the dollar index will be important factors influencing market sentiment.
‘’Among the key world indices, the Dow Jones Industrial Average (DJIA) is hovering around its medium term support zone of 100 DEMA i.e. 37,800 and if fails to hold the same then the 36,900-37,200 zone would be the next major support. In case of recovery, the 38,150-38,500 zone would act as a strong hurdle,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.
Oil Prices
Oil prices have risen 16 per cent so far this year near the $90 per barrel-mark, with supply worries high given escalating Middle East tensions between Iran and Israel and the persistent attacks on energy infrastructure between Ukraine and Russia. The market will be keeping a close eye on the fluctuations in crude oil prices, as geopolitical events frequently impact them, said analysts.
Corporate Action
In the coming week, shares of several companies including Fortis Malar Hospitals, ICICI Securities, among others will trade ex-dividend, while other firms such as Tip Industries and IIFL Finance will declare a buyback and a rights issue respectively. Some other companies will trade ex-bonus and ex-split. Check full list here
Technical View
Nifty 50 has adeptly defended its upward sloping support trendline, aligning closely with the psychologically significant 22,000 mark. It has also exhibited a bullish reversal signal, resembling a Bullish Piercing Line pattern on the daily charts. This suggests a potential bullish momentum after a corrective phase.
‘’Looking ahead, the next resistance level to monitor is around 22,300, with a possibility of extending to 22,500 if sustained momentum persists. Immediate support rests at 22,000. Analyzing the daily chart, formation of a Piercing Line pattern, further reinforcing bullish sentiment,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.
The indicator has breached the 55-day Exponential Moving Average (EMA) set at 22,067, indicating a positive short-term trend. A close above this moving average strengthens the bullish outlook, according to Nanda.
Market experts also highlighted that the pace of the rise has been gradual for the last four months and Nifty has penetrated the lower band of the rising channel but managed to close above the same
‘’We need sustainability above short term moving average i.e. 20 DEMA, which currently lies around 22,300 to strengthen the recovery. On the downside, we expect the 21,500-21,700 zone to act as a cushion. Meanwhile, traders should continue with a hedged approach amid the mixed indications and wait for clarity,” said Religare Brokings’ Ajit Mishra.
There is a lot of money waiting on the sidelines to enter the domestic market, as India’s long-term growth story provides an opportunity for investors to deploy funds after a healthy correction, according to Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
The Bank Nifty index displayed strong bullish momentum as it formed a bullish piercing candlestick pattern from the support level of 46,500. The immediate resistance for the index is located at 48,000, where there is a significant buildup of open interest on the call side, indicating a potential hurdle.
‘’The index has established immediate support between 47,200 and 47,000. Any pullbacks towards this support zone are seen as buying opportunities, suggesting continued bullish sentiment if these levels hold,” said Kunal Shah, Senior Technical & Derivative 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
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