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The last week was in favour of the bulls on Dalal Street as benchmark indices managed to cross crucial hurdles following the Reserve Bank of India’s decision to pause interest rate hikes. In this article, we will discuss the various factors that may impact the Indian stock market in the upcoming week.
The Market Trend
Nifty50 settled a tad lower than 17,600 points but clocked gains for the second consecutive week. While the overall trend for the market remains positive with a weak dollar and falling US bond yields, analysts do not see significant upside for the index in the coming week, as crucial events are lined up.
March Quarter Earnings
The March quarter earnings season will kickstart next week, and the crucial inflation data points will be released in the US and India. The March quarter earrings will kickstart with Tata Consultancy Services on Wednesday and Infosys on Thursday.
All eyes will be on the earnings as investors anticipate a lower guidance for the current financial year from the software majors amid the macroeconomic slowdown and financial instability in the US and Europe. Besides these 2 companies, HDFC Bank and Delta Corp will release their 4th quarter numbers next week.
Economic Indicators
The crucial consumer price inflation numbers for March will be released in both India and the US next week. This will be closely monitored by investors. In India, after easing a bit in November and December, the headline inflation moved above the RBI’s upper tolerance band of 2-6% in January and February.
Post its policy meeting, RBI Governor Shaktikanta Das said that inflation is likely to moderate in 2023-24, but the fight against it for the central bank is not over yet.
FOMC Minutes
On April 12, minutes of the US Federal Reserve’s March meeting will be released. In its March meeting, the Fed raised interest rates by 25 basis points and said that further policy measures are essential to bring down inflation to the long-term target of 2%.
While inflation has moderated somewhat since mid-2022, the strength of these recent readings indicates that inflation pressures continue to run high, Fed head Jerome Powell said. The minutes will give details on the assessment of the economy and the financial stress by Fed officials and might also give cues on future rate actions.
Corporate Action
On Monday, EID Parry board will meet to consider and approve payment of a dividend. Besides the sugar producer, Infosys, TCS, Anand Rathi, Delta Corp, and Nestle India will consider dividend payments. Vardhman Special Steels board will meet on April 12 to consider and approve bonus issue of shares.
Fund Flows
With some sanity returning to equities, foreign portfolio investors have been net buyers of shares. For 6 consecutive sessions, FIIs were net buyers and net bought shares worth around $168 million so far in April.
“The basic reason for the change in FPI stance is the declining dollar index and falling bond yields in the US. Also, the rupee has been appreciating in recent days from around 82.75 to 81.74 now. This trend is likely to gather momentum,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
Commodity Watch
The movement in crude oil prices will be closely monitored ahead of the release of the monthly oil market report by the Organization of the Petroleum Exporting Countries on April 13. Last week, oil prices had risen sharply after OPEC and allies including Russia pledged voluntary production cuts.
Gold prices, on the other hand, have been seeing a rise due to the declining US dollar and the fall in US treasury yields. Investors often turn to gold as a hedge against inflation and economic uncertainty.
Technical analysis is a popular method used by traders to predict market movements based on past price and volume data. Technical indicators such as moving averages, trendlines, and chart patterns are used to identify potential trading opportunities.
Conclusion
The upcoming week is poised to be a crucial one for the Indian stock market, with a lot of economic indicators and corporate actions lined up. The Q4 earnings season will kick off with TCS and Infosys reporting their results, and investors will be closely monitoring the results for any guidance on the current financial year. The release of inflation data in India and the US will also be closely watched, as will the minutes of the US Federal Reserve’s March meeting. Technical indicators suggest a positive trend for the market, but analysts caution that significant upside may not be seen in the coming week. Overall, investors will need to keep a close eye on the various economic and corporate developments to make informed investment decisions.