Dalal Street Week Ahead | Exit poll, auto sales, India & US GDP among 10 key factors that will keep traders busy next week

Dalal Street Week Ahead

The market had another spectacular week ending on May 24. The benchmark indices recorded new all-time highs, with the 2 percent rally boosted by select index heavyweights. The rally was  driven by better-than-expected March quarter earnings in key segments ahead of the Lok Sabha election results due on June 4. Further, the easing in FII selling, consistent buying by DIIs, RBI's bumper dividend payout, and healthy domestic macro data (including record rise in exports, and employment at a 18-year high in May) also supported the sentiment.

The mood is expected to remain upbeat, albeit highly volatile, as the market approaches the exit poll as well as the general election results, experts said. The participants will also keep an eye on the monthly auto sales data, and the March quarter GDP numbers of India and the US.

The Nifty 50 rallied 2 percent, or 455 points, to 22,957, and the BSE Sensex gained 1,404 points, or 1.90 percent, at 75,410, while the closing of the broader markets was mixed, with the Nifty Midcap 100 index rising 1 percent, and the Smallcap 100 index falling 0.7 percent.

Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services, expects the market to gradually move up and see some volatility next week as both the elections and the earnings season are coming to an end.

Here are the 10 key things to watch:

Corporate earnings

The March quarter earnings season is entering its final week, and more than 2,100 companies will release their results in that period. The important companies to watch will be Tata Steel, Life Insurance Corporation of India, Indian Railway Catering and Tourism Corporation, Astrazeneca Pharma, Natco Pharma, National Aluminium Company, NMDC, Aditya Birla Fashion and Retail, Amara Raja Energy & Mobility, Aster DM Healthcare, Engineers India, Exicom Tele-Systems, and General Insurance Corporation of India.

Further, MTAR Technologies, Wockhardt, Aadhar Housing Finance, Alkem Laboratories, Bata India, Cummins India, Emami, Ipca Laboratories, Mazagon Dock Shipbuilders, Samvardhana Motherson International, Apollo Hospitals Enterprise, Bharat Dynamics, and TBO Tek will also announce their quarterly earnings next week.

Lok Sabha elections

With the end of the sixth phase, the market's focus will be on the last  — seventh — phase of the elections on June 1, 2024, followed by exit poll results that same evening. Exit polls, conducted by several agencies (including news agencies), are opinion polls of voters taken immediately after their exit from the polling stations, and they often indicate the possible outcome of the elections ahead of the actual results (due on June 4).

On June 1, voting will be conducted in 57 constituencies across eight states, including Uttar Pradesh, West Bengal, Punjab, and Bihar.

The voter turnout recorded in the sixth phase was the lowest thus far in these elections, at 59.46 percent. It was at 66.10 percent in phase 1, 66.7 percent in phase 2, 65.7 percent in phase 3, 69.2 percent in Phase 4, and 62.2 percent in phase 5.

Auto sales

The next thing to watch for would be the auto sales data for May 2024, due in the initial days of next month. Starting June 1, all the auto companies, including Tata Motors, Hero MotoCorp, Maruti Suzuki India, Bajaj Auto, Mahindra & Mahindra, and Escorts will release their sales figures.

Domestic economic data

Further, market participants will closely watch the economic performance of the country as reflected in its GDP numbers, which are due on May 31. Economists expect the GDP (gross domestic product) data for the January-March quarter (Q4FY24) to be lower than the 8.4 percent recorded in the previous quarter (Q3FY24).

The third estimates for the full year GDP numbers will also be released on the same day. The economy is expected to register 7.6 percent growth for the financial year 2024, against 7.3 percent in FY23.

In addition, fiscal deficit numbers for March-April 2024, the infrastructure output for April, bank loan and deposit growth for the fortnight ending May 17, and foreign exchange reserves for the week ending May 24 will also be announced on May 31.

Global economic data

On the global front, all eyes will be on the second estimates of US GDP growth for the first quarter of 2024, due on May 30. Per the advance estimates in April, the US economy grew 1.6 percent during Q1 2024, against 3.4 percent growth seen in the previous quarter.

The second estimates for PCE  (personal consumption expenditure) prices, and real consumer spending in the US will also be released on the same day, and there will also be focus on the speeches by several Fed officials lined up in the coming week.

FII flow

In India, foreign institutional investor (FII) activity will be one of the important factors to watch next week. FII  selling has slowed down as they turned out to be net buyers (to the tune of Rs 1,165 crore in the cash segment in the truncated week ending May 24) for the first time, after being net sellers for several weeks. Experts believe that FIIs may be big buyers in the coming days if they see policy continuation after the general election results.

FIIs net sold Rs 34,460 crore worth of shares this month,  against Rs 35,692 crore in the previous month.

On the other hand, domestic institutional investors (DIIs) provided strong support to the market, as they continued to offset the FII selling. They net bought Rs 6,978 crore worth of shares last week, taking the current month's net buying to Rs 40,798 crore.

IPOs

In the primary market, there won't be any new issue opening next week in the mainboard segment. The Awfis Space Solutions IPO will close on May 27, and list on May 30.

Action will continue in the SME segment as five companies will hit Dalal Street with their IPOs in the coming week. Vilas Transcore's public issue will open on May 27, followed by the Beacon Trusteeship IPO on May 28, and Ztech India's initial share sale on May 29. Further, Aimtron Electronics will launch its IPO on May 30, and TBI Corn  on May 31.  GSM Foils will close its maiden public issue on May 28,  and list on May 31.

Technical view

Technical indicators suggest possible continuation of the positive mood in Dalal Street next week. Considering the long bullish candlestick pattern and higher high-higher low formation on the weekly charts, along with positive crossover in the RSI (Relative Strength Index) momentum indicator at 67.26, the Nifty 50 is expected to hit the upper band of the rising channel (placed at 23,100-23,200) in the coming days. Sustaining above the same can take the index to 23,500, with key support at around 22,800-22,700 levels.

"The market's buoyancy over the last two weeks has countered the previous bearish sentiment, and we expect the Nifty to move towards the 23,150-23,400 range soon. In the event of a dip, the 22,550-22,800 zone is expected to provide strong support," said Ajit Mishra, SVP, Research, Religare Broking.

F&O cues

Monthly options data suggests that the 23,000 level is expected to play a crucial role in the Nifty's direction in the F&O expiry week. "Significant Put writing was observed at the 23,000 strike. In fact, Put writers mounted a massive challenge on Call writers at 23,000 strike," said Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities. If that sustains, then the 23,500 level can possibly be seen in the June series, with major support at 22,500.

On the Call side, the maximum open interest was visible at 24,000 strike, followed by the 23,500 and 23,000 strikes, with the maximum writing at 24,000 strike, followed by the 23,500 and 23,900 strikes. On the Put side, the 23,000 strike holds the maximum open interest, followed by the 22,500 and 22,000 strikes, with maximum writing at the 23,000 strike, followed by the 22,500 and 22,900 strikes.

Volatility is likely to remain elevated as the market approaches the Lok Sabha election results, experts said. India VIX, the fear gauge, jumped 5.77 percent during the week to 21.71, and held the 21 mark throughout last week.

Corporate action

Here are key corporate actions taking place in the coming week:

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