“Benchmark indices snapped a two week losing streak by ending the Budget week higher with IT companies and Reliance gaining the most. Market sentiments were boosted after Govt sticking to fiscal glide path. On the sectoral basis, PSU banks gained the most while FMCG and Media fell the most,” Arvinder Singh Nanda, Senior Vice President of Master Capital Services said.
Nanda said that the market will react to the major domestic and global economic data, crude oil inventories, FII/DII investment and movement of rupee against dollar amid the ongoing earnings season.
Factors that are likely to impact movement when markets reopen this week:
RBI PolicyAfter a stable Union Budget which ticked most boxes on growth and fiscal prudence fronts, the baton is now with the Reserve Bank of India which will announce monetary policy decisions on February 8, Thursday. While the Central Bank is expected to keep interest rates unchanged, the Street will watch its guidance on growth and inflation. US MarketsUS markets ended up on Friday with strong gains amid a back-t-back rally in the technology stocks. While Dow 30 closed at 38,654.40, up by 134.58 points or 0.35% the S&P 500 surged by 52.42 points or 1.07% to finish at 4,958.61. Meanwhile, Nasdaq Composite settled at 15,629, higher by 267.31 points or 1.74%. 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. Q3FY2024 earningsNearly 120 companies will be announcing their December quarter earnings on Monday with Street keeping its eyes fixed on the results of Bharti Airtel and Ashok Leyland. Among other important results will be those by Avanti Feeds, Bajaj Consumer Care, Bajaj Electricals, Barbeque Nation, Cholamandalam Financial Holdings, KPR Mills, Tata Chemicals and Vijaya Diagnostics.
Rupee Vs DollarThe rupee surrendered early gains to settle flat at 82.98 against the US dollar on Friday, as a rise in crude oil prices negated the positive sentiment on strong domestic equities and a weak greenback overseas. The unit hit an intraday high of 82.82 and a low of 82.98.
“The Indian rupee….was supported by an upbeat risk appetite following the presentation of India’s federal budget and a fall in the US bond yields and the Dollar Index in the previous session, ” the PTI report said, quoting forex traders. “However, gains were capped as dollar demand from state-owned banks likely on behalf of the Reserve Bank of India and importers,” Sriram Iyer, Senior Research Analyst at Reliance Securities, said.
The rupee is expected to keep gaining due to inflows but RBI may restrict the gains and keep buying dollars in the coming week. The range could be 82.70 to 83.20, Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP said.
Corporate ActionMonday will be ex-date and record date for interim dividends of Mahanagar Gas, Coforge, Sona BLW Precision Forgings, CG Power and Tanla Platforms; February 6 ex-date and record date for GAIL India, Aarti Drugs, Motilal Oswal Financial Services and December 7 for VIP Industries.
Technical FactorsOn the outlook and important levels to watch out for, Pravesh Gour, Senior Technical Analyst at Swastika Investmart said that after Nifty’s Friday all-time high of 22,126, the key will be to maintain a sustained upward momentum at this level otherwise it might revert to a sideways trend.
“Above the 22,126 mark, the next targets will be 22,350 and 22,500. Conversely, on the downside, the range between 21,640 and 21,500 presents an immediate demand zone,” Gour said.
As for Bank Nifty which is facing resistance at the 47,000 mark after a meaningful bounceback from the 200-DMA, 45,700–45,400 is an immediate demand zone while 45,000 is a key support level, this analyst said. It has to cross the 47,000 mark for a move towards the 48,000 level, Gour opined.
FII / DII ActionFIIs and DIIs will be crucial on how markets perform on Monday. On Friday, foreign institutional investors were net buyers and purchased Indian equities worth Rs 70.69 crore. Meanwhile, domestic institutional investors (DIIs) were net sellers at Rs 2,463.16 crore.
Foreign portfolio investors have bought domestic equities worth Rs 2,053 crore in the two sessions in February after remaining net sellers in January where they sold shares worth Rs 25,744 crore.
IPO ActionIt is raining IPOs on Dalal Street with four mainboard public offers set to be launched next week along with one another SME issue. These five companies are planning to raise as much as Rs 2,700 crore via the primary market.
The mainboard offers include that of Park Hotels, Jana SFB, Capital SFB and Rashi Peripherals. Meanwhile, in the SME segment, there is a lone issue of Alex Solar.
Read more: IPO calendar: Rashi Peripherals, Park Hotels among 5 issues to raise about Rs 2,700 cr next week
Crude OilOil prices fell by about 2% on Friday amid weekly losses after US jobs data shrank the odds of imminent interest rate cuts in the world’s largest economy, which could dampen crude demand, Reuters reported.
On the Comex, US WTI crude oil futures ended at $72.410 per BBL, down by $1.410 or 1.910% while Brent oil futures at $77.330, lower by $1.030 or 1.310%. As for MCX crude oil futures, the February contract ended at Rs 6,036, up by Rs 170 or 2.74%.
Oil prices are critical to Indian macros and also inflation and impact overall sentiments in the markets.
Bond YieldsIndian government bond yields plummeted this week, with the benchmark yield posting its biggest drop in 15 months, as investors cheered a fiscally-prudent federal budget and as US treasury yields nosedived.
India’s benchmark 10-year yield ended at a 7-month low of 7.0555%, against the previous close of 7.0583%, Reuters reported. The yield fell 12 basis points this week, the sharpest decline since November 11, 2022.
“The budget has provided a positive outlook and a kicker for the bond market as the supply is going to be at same levels whereas the expected demand is more on account on global bond (index) inclusion,” this Reuters report said quoting VRC Reddy, treasury head at Karur Vysya Bank, said. “It is a Goldilocks period for the bond market and time to play with duration, possible to see the 6.80% levels in the first half of this calendar year,” he added.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
(You can now subscribe to our ETMarkets WhatsApp channel)
