While most sectors are contributing positively except for IT, banking performance is likely to heavily influence market sentiment, analysts say.
“The rising VIX is indicative of potential volatility. Market can turn highly volatile in the short-run. Fed’s decision indicates rate cuts much lower-than-expected earlier this year. Inflation has turned stubborn at lower levels. But the latest jobs data in the US indicates a slowing economy and, therefore, rate cuts may be necessitated. The wage increase falling below 4% also reflects a weakening labour market. From the stock market’s perspective this is good news,” said VK Vijayakumar of Geojit Financial Services.
Here are key factors that may influence market mood in the week:
1) Global markets
Global markets are currently in a good mood after strong earnings from tech stocks, with the Dow Jones up 1.14% and Nasdaq up 0.97% in the first week of May 2024. US 10-year bond yields and the dollar index are also cooling off, which gives strength to the market. Economic data releases from China and the US, along with movements in the global currency market, will also be factors to consider, said Pravesh Gour of Swastika Investmart.
2) FPI flows
In the two days of trading in May, FPIs have invested Rs 1156 crore in equity and sold Rs 1726 crore in debt.
“The market is at record highs. There has been a pre-election rally. It is not as strong as in the past. More than anything else, FPIs will respond to changes in the US bond yields. If the US bond yields fall and the Indian economy and markets do well they will turn aggressive buyers,” said Vijayakumar.
3) Technical
Nifty has formed a bearish Gravestone Doji-like pattern on weekly charts. Pressure persists around record high levels for the Nifty, with a close below 22,400 potentially leading to further declines toward the 22,200-21,850 range. The sharp increase in the India VIX volatility index suggests caution despite the ongoing uptrend. Resistance is expected in the 22,750-22,900 zone in case of further upward movement, Ajit Mishra of Religare Broking said.
4) IPO calendar
At least 9 IPOs are lined up for the week. Of these, three companies will launch their issues in the mainboard segment and the rest in the SME division. While Indegene will launch its Rs 1800 crore IPO on May 6, the public offers of Aadhar Housing Finance and TBO Tek will open for subscription on May 8. All three companies will cumulatively raise just over Rs 6,000 crore through their issues.
5) Global cues
Global cues that will keep investors busy are Bank of England’s rate decision and US’ initial jobless claims on May 9.
6) Q4 Earnings
When the market opens on Monday, it will react to the Q4 earnings of Kotak Mahindra Bank, DMart and IDBI Bank. Major companies that would announce their numbers are DRL, Cipla, Tata Motors, Asian paints, BPCL, SBI, Hero Moto and L&T.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)