News

Published: November 9, 2024
Updated: November 9, 2024

Week Ahead: Key Market Triggers for Nifty and Sensex

Overview

This week, the Indian stock market’s trends will hinge on a variety of key triggers, including domestic and global macroeconomic data, Q2 earnings results, foreign fund flows, and global cues. Nifty 50 and Sensex have shown signs of consolidation, and analysts expect a possible upward target around 24,500.

Recent Market Performance

Indian equity benchmarks, Sensex and Nifty 50, have continued their corrective phase, with Nifty down about 8% since its record high in late September. The decline is driven by mixed corporate earnings, significant foreign fund outflows, and losses in large-cap stocks. Broader indices saw small-cap stocks drop by 2%, while mid-cap stocks remained more stable.

Domestic Triggers: Q2 Earnings and Macroeconomic Data

The market focus is set to shift back to domestic data, especially with the Q2 earnings season in its final phase. Key economic data, including industrial production and retail inflation, will be released on November 12, and wholesale inflation data on November 14. Analysts are watching for signs of increased inflation and an expansion in industrial production. As the year-end approaches, government spending could support corporate earnings, especially during the festive season.

IPO Activity and New Listings

This week, the primary market will see several new initial public offerings (IPOs). Major IPOs, including Zinka Logistics Solution (BlackBuck) and Niva Bupa Health Insurance, are drawing attention, with the latter closing for bidding on November 11. Additionally, new listings such as Sagility India, Swiggy Ltd, ACME Solar Holdings, and Niva Bupa Health Insurance are set to debut on BSE and NSE.

FII and DII Activity

Foreign institutional investors (FIIs) have been net sellers, with outflows nearing ₹20,000 crore last week, primarily due to better opportunities in other global markets, notably the US, following the recent election outcome. However, domestic institutional investors (DIIs) have continued their support, buying equities worth ₹14,391 crore. Sustained FII outflows remain a key concern for the Indian market.

Global Cues and the Impact of US Policies

Globally, the conclusion of the US presidential election and a strong Republican majority have brought some stability, reducing uncertainties and potentially favouring the US market in the short to medium term. Meanwhile, the upcoming US inflation report on November 13 could impact Federal Reserve policy, with potential effects on bond yields and the dollar index, both of which are closely watched by emerging markets like India.

Oil Prices

International crude prices saw a decline last Friday as traders were less concerned about supply disruptions in the US Gulf. Brent crude dropped by 2.3% to $73.87 per barrel, while US West Texas Intermediate (WTI) futures also declined. Despite this, weekly gains were recorded due to expectations of tighter US sanctions on Iran and Venezuela. In India, crude futures settled slightly lower at ₹5,950 per barrel on the MCX.

Technical Outlook

Nifty 50 remains in a consolidation phase between 24,000 and 24,500, with mixed signals indicating that this trend may continue. A breakout above 24,500 could propel the index toward 24,800, while a breakdown could apply pressure, potentially pushing it down to the 200-day exponential moving average near 23,500. The IT sector remains resilient, and a boost in this sector could support a broader recovery.