Dalal Street Week Ahead: Inflation, Q4 earnings, FII flows, global cues, among factors that may drive Sensex, Nifty

The benchmark Nifty50 index gained 1.36%, or 245.8 points, to end at 18,314.80, while the BSE Sensex rallied 1.59%, or 973.61 points, to close the week at 62,027.90. The BSE Largecap and Midcap indices also gained 1.3% each for the week. The Smallcap index added 1%.

“Over the week, the domestic market was influenced by positive global market trends that revolved around the US inflation numbers and the jobs data. Moderation of US inflation below 5 percent provided a welcome relief for investors, indicating that the Federal Reserve’s efforts to raise interest rates have effectively managed inflation levels,” said Vinod Nair, Head of Research at Geojit Financial Services.

However, weak macroeconomic data, such as elevated jobless claims and a modest increase in producer prices, raised concerns about slower economic growth, dampening market sentiment towards the latter half, he added.

Read here: Sensex, Nifty end higher; mid, smallcaps underperform

Last week, eight of the top 10 top companies on the bourses together added ₹1,26,579.48 crore in market valuation, with Reliance Industries and Hindustan Unilever Ltd emerging as the biggest gainers.

Reliance Industries, Tata Consultancy Services (TCS), HDFC Bank, ICICI Bank, Hindustan Unilever, State Bank of India, HDFC and Bharti Airtel were the gainers, while ITC and Infosys faced erosion in their valuation.

Going ahead, domestic inflation numbers, macro data, Q4 earnings and global cues will influence the domestic market next week.

“Markets on Monday will react to India’s inflation data and the Karnataka election outcome. Market has now been consolidating for the last 4 days and is awaiting fresh triggers for the next leg of the rally as the structure of the market remains positive. Investors would continue to keep an eye on economic data to be released next week,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Here are the key triggers for Dalal Street in upcoming week:

Inflation data

India’s retail inflation eased to an 18-month low of 4.7% in April, nearing the Reserve Bank of India’s (RBI) target of 4%, as per the government data released on Friday. 

Meanwhile, the wholesale price index data is also scheduled to be released on May 15. The annual WPI-based inflation of the country came in at a 29-month low of 1.34% in March,

With CPI inflation at 4.7%, analysts believe the number will give comfort to the RBI’s Monetary Policy Committee (MPC) and hence there will be a pause on repo rate hikes going ahead.

IIP data

India’s industrial production growth declined to a five-month low of 1.1% in March from 5.8% in February 2023, dragged by poor performance of power and manufacturing sectors, as per the official data.

“The deceleration in IIP growth in March is concerning. Specifically worrisome is the contraction in the consumer goods segment. Going forward, it is very critical for the domestic consumption demand to show improvement, given that external demand is likely to remain weak. Pick-up in investment demand will also be contingent on continued revival in domestic consumption demand,” CARE Ratings said in a report.

Corporate Earnings

The March quarter earnings season is in its last leg and more than 500 companies will announce their quarterly results in the week ending May 21. The list includes big names like Bharti Airtel, ITC, State Bank of India, IOC, GAIL India, JSW Steel, NTPC, Jindal Steel & Power, PowerGrid Corporation of India and Bank of Baroda.

Other prominent companies such as Jubilant Foodworks, Tata Elxsi, Motherson Sumi Wiring, PVR Inox and Zomato will also announce their Q4FY23 earnings during the week.

Also Read: Adani Group stocks: Adani Enterprises, Adani Transmission, Adani Green, Adani Total to be on investors’ radar

Nexus Select Trust REIT listing

Nexus Select Trust REIT IPO received strong response from investors as the issue subscribed 5.45 times on the final day of bidding. The IPO got bids for 101 crore units against an offer size of 18.52 crore shares.

Nexus Select Trust REIT IPO allotment is set to be finalised on May 16 and the listing will take place on May 19. After the closure of Nexus Select Trust IPO subscription, shares of the company are available at a premium of ₹5 per share in the grey market.

FII and DII flows

The foreign institutional investors (FII) bought Indian shares worth ₹7,750 crore between May 8-12, while the domestic institutional investors (DII) net sold shares worth ₹1,262 crore during the period, as per the data available on the exchanges.

The FII inflow comes after they pumped in ₹5,527 crore in the domestic markets in the first week of May. 

Corporate Action

Shares of as much as 16 companies will trade ex-dividend next week. These companies include Anupam Rasayan India, Sula Vineyards, Tata Coffee, HDFC, HDFC Bank, Sundram Fasteners, Foseco India, Man Infraconstruction, Advanced Enzyme Technologies, Colgate-Palmolive, Home First Finance Company India, JM Financial, Rain Industries, and Tata Consumer Products.

Read here: Stocks that will turn ex-dividend from May 15-20; HDFC Bank, Colgate, Tata Consumer, others: Check list here

Karnataka election results

The Congress party returned to power with a strong majority in the state of Karnataka, knocking the Bharatiya Janata Party (BJP) off its only southern perch on Saturday. 

“The recently-concluded Karnataka election has resulted in Congress emerging as the clear winner. While this may have a sentimental negative impact on the market, it is important to note that much of this outcome has already been factored in by investors. Therefore, it is unlikely that we will witness a significant reaction from the market in response to this development,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Read here: Karnataka election results 2023: How stock market will react after BJP’s loss?

Global cues

A slew of global macroeconomic data points will be released next week that are likely to influence the financial markets.

In the US, Retail Sales data and Industrial Production for April will be released on May 16. The API & EIA crude oil inventory data and the Housing Strats for April will be out on May 17, while Initial Jobless Claims for the week ended May 13 and Existing Home Sales for April will be announced on May 18.

“While global cues are relatively muted, market participants will be keeping a watchful eye on the direction of US markets, bond yields, and the dollar index, which could potentially impact Indian equities,” said Meena added.

(With PTI inputs)