Week Ahead: Q3 Results, FII inflows, global cues among key market triggers as Nifty 50 tests 22,000 this week

Domestic equity benchmarks Sensex and Nifty 50 ended a two-week long consolidation phase and settled around the week’s high. On a weekly basis, the BSE benchmark jumped 542.3 points or 0.75 per cent, and the Nifty 50 climbed 183.75 points or 0.84 per cent. Nifty 50 is now just 100 points away from crossing another milestone of 22,000.

The IT index jumped 5.14 per cent, logging its best session since October 8, 2020, to hit a 21-month high. Market leaders Infosys and Tata Consultancy Services (TCS) emerged as the primary catalysts behind the surge in the Sensex index, concluding as the top contributors.

In the previous session, the frontline indices saw strong gains on January 12, primarily driven by the stellar performance of IT giants. Both key indices, along with the mid and smallcap indices hit fresh all-time highs during the session, fueled by an optimistic sentiment following the better-than-expected December quarter earnings of TCS and Infosys.

Also Read: Nifty January series outlook: 4 stocks where investors can park their money; do you own?

Sensex hit its fresh all-time high of 72,720.96 during the session before closing the day with a robust gain of 847 points, or 1.18 per cent, at 72,568.45. The Nifty 50 hit its fresh record high of 21,928.25 during the session and closed at 21,894.55, jumping 247 points, or 1.14 per cent. With this, both indices settled at their fresh closing peaks.

BSE Midcap index hit its fresh record high of 37,941.29 during the session. The BSE Smallcap index closed at 44,503.70, with a gain of 0.41 per cent, after hitting its fresh all-time high of 44,644.04 during the session.

“Contrary to expectations of weak Q3 results from the IT sector, better-than-expected results along with green shoots of recovery in the IT sector on the back of an improved outlook for BFSI in FY25 positively influenced domestic market sentiments,” said Vinod Nair, Head of Research, Geojit Financial Services.

‘’In the near term, investors’ trade positions will be more inclined towards the upcoming result season; the overall forecast for earnings growth remains optimistic, projecting double-digit figures,” added Nair.

Going forward, a busy week awaits the primary market as some new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. A special live trading session scheduled for Saturday, January 20.

The upcoming week will be crucial from the domestic and technical point of view as investors will closely eye the corporate results announcements along with and macroeconomic and global cues.

Also Read: SBI Cards, NMDC and more: ICICIdirect lists 7 stock picks for 2024 with up to 30% potential upside

Overall, analysts expect markets to be majorly driven by the ongoing Q3FY24 earnings season and stock-specific action after the indices surged to lifetime high levels last week. Nifty 50 is likely to test the 22,000-mark, however, the prevailing underperformance of banking could keep the momentum in check. 

Here are the key triggers for stock markets in the coming week:
 

Q3 Results, Macro data:

The ongoing Q3FY24 earnings season will be the biggest factor in driving the market movement. Many major companies will be announcing their quarterly numbers in the coming week such as Federal Bank, HDFC Bank, Asian paints, ICICI Prudential Life, IndusInd Bank, Hindustan Unilever, UltraTech Cement, among others. India’s wholesale inflation data and other macroeconomic cues will also guide market sentiments this week.

‘’It is expected that the Nifty 50 companies see good Q3FY24 earnings for yet another quarter as the macro factor improves in India. Most of the companies in Nifty 50 are automobile, auto ancillary, metals, capital goods, electronics and a few financial services,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

Also Read: BSE, NSE to conduct special live trading session next week. Date, time, other details

5 new IPOs, 5 listings to hit D-Street:

In the mainboard segment, Medi Assist Healthcare IPO will open for subscription on January 15 and EPACK Durable IPO will open on January 19. Among listings, shares of Jyoti CNC Automation will debt on stock exchanges BSE, NSE on January 16.

In the SME segment, Maxposure IPO will open for bidding on January 15, while Konstelec Engineers IPO and Addictive Learning Technology Limited IPO (Lawsikho IPO) will open on January 19. Among listings, shares of IBL Finance will debut on NSE SME on January 16. 

On January 18, shares of New Swan Multitech and Australian Premium Solar (India) will get listed on BSE SME and NSE SME respectively. Also, shares of Shree Marutinandan Tubes will debut on BSE SME on January 19.

FII Activity:

Domestic institutional investors played a pivotal role in driving the rally in domestic markets last week, with net purchases exceeding ₹6,800 crore, while foreign institutional investors were net sellers with a total divestment of ₹3,900 crore.

Foreign portfolio investors (FPIs) were net buyers in the Indian stock market in 2023 but the inflows slowed down in early January. FPI investments saw a sharp uptick in December after having reversed their three-month selling streak in November.

FPIs have bought ₹3,864 crore worth of Indian equities and the total inflow stands at ₹9,034 crore as of January 12, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.

‘’The trend is likely to continue, going forward. Since 2024 is expected to witness further declines in US interest rates, FPIs are likely to increase their purchases in 2024 too, particularly in the early months of 2024 in the run up to the General elections. FPI investment in debt is likely to accelerate, going forward,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Global Cues:

On the global front, macroeconomic data from the USA and China, along with movement of the rupee against the dollar index, US bond yields, and crude oil prices, will be closely monitored. ‘’Geopolitical tensions worldwide continue to be a source of uncertainty, demanding the market’s vigilant attention,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Analysts added that with higher-than-expected US inflation and positive job data, the euphoria over early rate cuts by the US Fed has moderated, which has diminished global market sentiments.

‘’The performance of the US markets will remain in focus for cues. We have been seeing consolidation in the Dow Jones Industrial Average (DJIA), with bias on the positive side. A decisive breakout above 37,800 would prompt the next leg of up move towards 39,000 levels and the support has shifted to the 36,900-37,300 zone,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Oil Prices:

Oil prices rose one per cent in the previous session as an increasing number of oil tankers diverted course from the Red Sea following overnight air and sea strikes by the US and Britain on Houthi targets in Yemen after attacks on shipping by the Iran-backed group.

Brent crude futures settled 88 cents, or 1.1 per cent, higher at $78.29 a barrel. The session high was up over $3 to more than $80, its highest this year. US West Texas Intermediate crude futures climbed 66 cents, or 0.9 per cent, to $72.68, paring gains after touching a 2024 high of $75.25.

For the week, Brent was down 0.5 per cent and WTI 1.1 per cent lower. Earlier in the week, sharp price cuts by top exporter Saudi Arabia and a new build in US crude stockpiles spurred supply worries, according to news agency Reuters.

Corporate Action:

Shares of some companies, including Tata Consultancy Services (TCS), HCL Technologies and few others will others will trade ex-dividend in the coming week, starting from Monday, January 15. Some other companies will also trade ex-bonus, ex-split while some have announced a buy back of shares next week. Check full list here

Technical View:

On the domestic front, Nifty has reclaimed its record high and looks set to test 22,150 and then 22,500 however pace of rise could be gradual due to the prevailing underperformance of banking. 

‘’In case of any profit taking, the 21,150-21,500 zone would continue to act as strong support. Meanwhile, we suggest focusing on other key sectors for stock selection. Since the choppiness remains high during the earnings, risk management plays a critical role irrespective of the market trend and traders should plan their trades accordingly,” said Religare Brokings’ Ajit Mishra.

From a technical standpoint, Nifty successfully breached the 21,800 resistance level, with 22,000 acting as a psychological hurdle and 22,220 identified as the next target level. On the downside, the 21,750–21,650 range constitutes the immediate demand zone, with 21,500 serving as a key support level, according to Swastika Investmarts’ Santosh Meena.

In Bank Nifty, a significant hurdle for the index is identified at 48,000, marked by substantial call writing. ‘’A decisive breakthrough above this level is anticipated to trigger a sharp short-covering rally. The immediate support is at 47,200-47,000. A breach would trigger aggressive selling pressure, potentially leading to a downside,” said Master Capital Services’ Arvinder Singh Nanda.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 14 Jan 2024, 06:11 AM IST