Markets

Published: October 16, 2023
Updated: October 16, 2023

Market Insights: Key Triggers for the Week Ahead

The upcoming week is poised to be a crucial one for investors, offering a blend of domestic and global factors that will guide market direction. Notable events on the horizon include the release of Q2FY24 results, monitoring of macroeconomic data, foreign fund inflows, fluctuating crude oil prices, and the ongoing Israel-Hamas conflict. Let's delve into the key triggers that will shape market sentiment in the coming week.

Review of Previous Week:

The past week witnessed volatile swings in the Indian markets, with an initially gloomy start followed by signs of stability as global indices found their footing. Despite the positive expectations surrounding Q2 earnings and moderate global bond yields, concerns related to the Middle East conflict and unexpected U.S. inflation data posed some challenges by the end of the week. While banking stocks underperformed and IT majors faced revenue concerns, the market managed to close with modest gains.

Key Triggers for the Upcoming Week:

1. Q2 Results and RBI MPC Minutes:

The coming week will see several significant companies unveiling their Q2FY24 results. Notable names on the list include Federal Bank, Bajaj Finance, CEAT, Tata Coffee, and more. Additionally, the Reserve Bank of India's Monetary Policy Committee (MPC) will release the minutes of its recent meeting, providing insights into the economic factors that influenced their decisions.

2. Wholesale Price Index (WPI)-based Inflation Data:

On October 16, the WPI-based inflation data for September will be published. This data is critical as it will shed light on India's inflation trends. The recent report revealed that India's WPI remained in negative territory for the fifth consecutive month in August, while the CPI- based inflation eased, falling within the RBI's tolerance range.

3. IPO Activity:

The primary market remains active with three IPOs lined up, spanning the mainboard and small-and-medium enterprises (SME) segments. These include IRM Energy IPO, WomanCart IPO, and Rajgor Castor Derivatives IPO. Additionally, Committed Cargo Care is set to be listed on NSE SME.

4. FII Outflow:

Foreign portfolio investors (FPIs) have been on a selling streak, with a focus on U.S. bond yields. FPIs have divested substantial amounts from Indian equities and debt instruments, but concerns of missing out on potential Indian market rallies could limit further selling.

5. Global Cues:

Global events such as Eurozone Trade Balance, U.S. retail sales, jobless claims, UK CPI and PPI data, and remarks from U.S. Federal Reserve Chair will significantly influence market trends. The festive season may provide a boost to the consumption scenario. Investors will keenly observe the Israel-Hamas conflict, crude oil price movements, and quarterly earnings of major global companies and banks. The trajectory of the U.S. market, particularly the Nasdaq index, will be closely watched.

6. Oil Prices:

Crude oil prices have surged due to the Israel-Hamas conflict, prompting concerns about a potential expansion of the conflict into oil-producing regions in the Middle East. The Middle East's oil market remains on edge. Brent and West Texas Intermediate (WTI) crude saw substantial gains, with Brent recording its highest weekly increase since February.

7. Corporate Action:

In the week ahead, multiple companies, including Tata Consultancy Services (TCS) and HCL Technologies, will trade ex-dividend. Some stocks will also trade ex-split and ex-bonus.

The upcoming week is poised to be eventful, with a blend of domestic and global factors influencing market sentiment. Investors will closely monitor Q2 results, macroeconomic indicators, and the evolving global landscape to make informed decisions in a dynamic market environment. It is essential to stay attuned to these triggers to navigate the financial markets effectively.