The coming truncated week is likely to bring in volatility as a plethora of companies are scheduled to release earnings and the October derivatives expiry is due. “Markets are likely to remain sideways to volatile in the coming week, and Nifty 50 may trade within a wider range of 19300-19850,” said Arvinder Singh Nanda, senior vice president, Master Capital Services.
A breakout in either direction within this range has the potential to trigger a significant move, possibly spanning 200 to 400 points in one direction, Nanda said.
On Friday, the Nifty 50 ended at 19542.65 points, down 82.05 points or 0.4%. The stock market will be closed on Tuesday for Dussehra.
The market will take further cues from the Israel-Palestine conflict. One should keep watch on the earnings of major companies in India. Some major global and domestic events will be in focus such as UK services PMI, US Manufacturing and Services PMI, building permits, new home sales, GDP, initial jobless claims, crude oil inventories, India’s balance of payment, and forex reserves.
Q2 Earnings
Investors will remain focused on the earnings season, which saw a soft start, as it would help in gauging the underlying growth trends for companies.
Axis Bank, Tech Mahindra, ACC, Asian Paints, Bajaj Finserv, Cipla, Dr Reddy’s Laboratories, Maruti Suzuki, SBI Cards, Indus Towers, Jubilant FoodWorks, Canara Bank, and Colgate Palmolive are some of the major companies announcing earnings in the next week.
Shares of Kotak Mahindra, YES Bank, IDBI Bank, ICICI Bank, and RBL Bank will also move on the back of their earnings reported over the weekend.
Macro Data
Among the macroeconomic data points to watch out for next week will be the flash PMI for October, to be released in the US, UK and Eurozone on Tuesday.
Apart from this, the interest rate decision of the European Central Bank, due on Thursday, will also be tracked by investors.
Global Markets
The geopolitical tensions due to the Israel-Palestine conflict has kept global markets on tenterhooks of late. Therefore, developments surrounding it will be closely monitored and its consequent impact on global markets.
Yield Movement
The recent surge in US bond yields has had a negative impact on equities, as rising risks are prompting investors to switch to haven bets.
The US 10-year bond yield has crossed 5% following hawkish remarks by US Fed Chairman Jerome Powell, who hinted at more rate hikes to control inflation. The movement in bond yields will continue to be closely tracked by investors.
FII Flows
Increasing rate hike concerns and geopolitical tensions triggered outflows from foreign institutional investors for the second month in October. So far in October, FPIs have net sold equities worth over $1.1 billion.
“Flows from foreign institutional investors are expected to remain volatile on increasing concerns about elevated global interest rates, rising energy prices, and a mixed set of corporate earnings print in Q2FY24 so far,” said Shrikant Chouhan, head of equity research (retail), Kotak Securities.
Crude Oil
The volatility in prices of crude oil have also had a bearing on the market of late, given its potential impact on inflation. Therefore, investors will continue to keep a tab on the movement in the commodity. On a week-on-week basis, light sweet crude oil prices rose about 1%.
Technical Indicators
Technical charts suggest that the short term trend of Nifty 50 remains negative.
A slide below the immediate support of 19480 could drag the index towards the next support of 19350 levels in the near term, said Nagaraj Shetti, technical analyst, HDFC Securities.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)