Last week, the Indian stock markets closed on a positive note, driven by encouraging macroeconomic indicators. As we enter the upcoming week, investors will closely watch for several key data releases that promise to keep the market dynamics vibrant. These include the quarterly results of major IT companies, signaling the beginning of a new earnings season for the second quarter of FY24. Additionally, attention will be on India’s trade balance, consumer and wholesale inflation figures, and the Industrial Production (IIP) data. On the global front, the core inflation rate in the United States will be a significant point of interest.
Economic Data: The upcoming week is set to be laden with critical macroeconomic data. Market participants will keep a keen eye on the Index of Industrial Production (IIP) data for August, scheduled for release on October 12. The same day will also see the announcement of Consumer Price Index (CPI) data for September. Following this, the Wholesale Price Index (WPI)-based inflation data will be unveiled on October 13. Meanwhile, October 13 will also bring forth India’s Foreign Exchange Reserves and Balance of Trade data.
Quarterly Results: With the commencement of the second quarter earnings season, investors will eagerly await the release of financial results from several key companies next week. Notable among them are Tata Consultancy Services (TCS), HCL Technologies, Infosys, Tata Metaliks, and Avenue Supermarts.
US Market Data: On the global front, attention will be on economic data from the United States, the world’s largest economy. Starting on October 10, investors will focus on data such as Redbook and Consumer Inflation Expectations, followed by the Producer Price Index and Federal Open Market Committee (FOMC) Minutes on October 11. On October 12, the Core Inflation Rate and Initial Jobless Claims will be in the spotlight, with Imports-Exports data, Michigan Consumer Sentiment, and Baker Hughes Oil Rig Count following on October 13.
Global Market Trends: Vinod Nair, Head of Research at Geojit Financial Services, pointed out that rising US bond yields and a stronger dollar index have discouraged foreign investors, leading to market weakness. Additionally, robust US job data during the week has raised concerns about a potential rate hike by the Federal Reserve (Fed), with surging US bond yields signaling an impending increase in interest rates.
Nair further noted that the Reserve Bank of India’s (RBI) hawkish stance, especially in managing liquidity to counter inflationary risks, has also impacted the market, resulting in an uptick in India’s 10-year bond yield. However, the market has found support from strong domestic Purchasing Managers’ Index (PMI) data and corrections in crude oil prices, helping it recover from the previous three weeks’ weaker trend.
He emphasized the significance of monitoring the release of US non-farm payroll data, which could significantly influence the interest rate outlook. Additionally, the upcoming week will draw attention to the quarterly results from the IT and banking sectors.
Technical Outlook: Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty ended the week with a modest gain despite some selling pressure in the banking sector. He anticipates that market sentiment will remain positive as long as the Nifty maintains its crucial support level at 19,500, with potential support from put writers at this level. On the upside, resistance is likely to be encountered around 19,750-19,800, making a strategy of buying on dips favorable as long as the Nifty holds above 19,500.
Bank Nifty: Kunal Shah, Senior Technical and Derivative Analyst at LKP Securities, observed that the Bank Nifty faced challenges in reclaiming ground above the ascending trendline on the daily chart, indicating a bearish trend in the banking sector. Additionally, the index has consistently remained below key moving averages, reinforcing this bearish trend. Shah suggests that a significant breakthrough above 44,550 could potentially propel the index toward 45,000 and beyond, with support situated at 44,200 on the downside.