Weekly Market Outlook

Quarterly results, global cues, monsoon forecast to drive markets this week

The Nifty and the Sensex closed the last week ended April 20 with a small upside – the sectoral indices IT, metal and FMCY surged while bank was lower, due to the on-going disruption in the banking sector in India. The 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) rose by 222.93 points or 0.65 per cent to close at 34,415.58 points. Similarly, the wider NSE Nifty50 made gains. It closed trade at 10,564.05 points, up 83.45 points or 0.80 per cent from its previous week's close.

This week, market sentiment are likely to be driven by the monsoon forecast, quarterly results of some key companies, crude prices and other global indicators. The weather department has forecast that India is going to receive normal monsoon in 2018, which will further improve market sentiments. Further companies like  Bharti Infratel, Bharti Airtel, Bajaj Corp, Ultratech, Wipro, Axis Bank, Biocon, Tata Elxsi, Yes Bank, IDFC, Maruti Suzuki and RBL Bank will come out with their March quarter numbers this week.

On the macro front, there are no major events lined up for the coming week.

Global events that will have a bearing on sentiments include Japanese Flash Manufacturing PMI, European Flash Manufacturing & Services PMI, US Flash Manufacturing & Services PMI and US Existing Home Sales data which will be announced in the current week. Also US Crude Oil Inventories data, ECB Monetary Policy, US Durable Goods Orders and US Unemployment Claims data will be announced, as also Japanese Industrial Production, BOJ Monetary Policy, Japanese Housing Starts, UK GDP and US GDP data will be announced.

Other global cues such as volatile crude oil prices, along with the policy stance of major global central banks are expected to guide the Indian equity markets.

Better earnings, improved sentiment and weaker INR (Indian rupee) would help the IT sector stocks. Earnings releases of Axis, Yes and HDFC banks would be monitored closely to assess the trends of incremental NPAs (non-performing assets) recognition in private banks.

The Indian rupee had weakened by 92 paise to close at 66.13 against the US dollar for the week ended April 20. In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 2,821.24 crore, while the domestic institutional investors purchased stocks worth Rs 2,124.16 crore during last week. Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors divested equities worth Rs 3,096.62 crore, or $471.78 million, during April 16-20.

In the F&O segment, since prices have entered the supply zone of 10,468-10,702, the probability of a consolidation/correction from the current level cannot be ruled out with April expiry round the corner. At present, Nifty has resistance at 10,665, 10,722, 10,798 levels, whereas on the downside it has support at 10,462, 10,405 and 10,338 levels. In the coming week, if Nifty50 trades and closes above the 10,607 level, then it is likely to test the 10,665, 10,722 and 10,798 levels. However, if Nifty trades and closes below 10,520 levels, then it can test the 10,462, 10,405 and 10,338 levels. Broadly, for the current week, the 10,400 level remains a crucial support for Nifty50. Further upsides are likely once immediate resistance of 10,632 points is taken out.

Posted by Digamber Lokhande