After three consecutive weeks of losses, the market rebounded last week buoyed by better-than-expected March quarter earnings from India Inc and US Federal Reserve's accommodative stance. However, selling pressure after monthly expiry amid rising COVID cases locally limited gains.
The BSE Sensex rallied 903.91 points or 1.89 percent to 48,782.36, and the Nifty50 climbed 289.75 points or 2.02 percent to 14,631.10. BSE Midcap index gained 1.9 percent and Smallcap rose 3.2 percent.
Experts expect the volatility to continue given the rising COVID cases, uncertainties regarding vaccination, while stock-specific action will continue given the March quarter earnings season along with global cues.
"Domestic bourses in the following week are expected to be influenced by dual factors - quarterly results and further restrictions on increasing COVID cases. Volatility may also show further uptick as markets are asymmetric in nature and positive news can move the needle to some extent but any bad news can turn to be extremely brutal given the valuations are frothy," said Nirali Shah, Head of Equity Research at Samco Securities.
"The tussle between the bulls and bears will continue in the next week too and there can be tiny corrections in stocks which have already run up following their year-end results," she added.
Here are 10 key factors that will keep traders busy in the coming week:
1) Lot of Events To Decide Monday Mood
First, participants will react to the earnings of Reliance Industries which came in after market hours on Friday. Besides, monthly auto sales numbers will also start pouring in from May 1. In the following session, the election results of the five states will also be the focus on May 2. On the economy front, Markit Manufacturing PMI and Markit Services PMI data are scheduled on May 3 and May 5 respectively. Needless to say, updates related to COVID cases, vaccine drive and global cues will also be closely tracked.
RIL and IndusInd Bank's quarterly earnings met analysts' expectations while Yes Bank missed analysts' expectations.
The record high GST revenue of Rs 1.41 lakh crore for April released on Saturday and auto companies' sales for April could also influence the market on Monday. Auto sales were expected to be weak for April as several states imposed restrictions to control the virus spread, but M&M's tractor sales were higher on a month-on-month basis.
Apart from this, the impact of results of assembly elections in Assam, West Bengal, Kerala, Tamil Nadu and the Union Territory of Puducherry on May 2 will be seen in the market on coming Monday. The exit poll in West Bengal projected a close contest between TMC and BJP
, while the exit polls in
Kerala and Tamil Nadu indicated incumbent LDF to retain and DMK’s return after 10 years.
Catch All Live Updates on West Bengal, Assam, and Tamil Nadu Assembly Elections Results Here
Exit poll in Assam projected BJP to retain power once again, while a clean sweep for NDA with 18-21 seats in Puducherry was projected by the exit poll.
Earnings season will gain more pace in the first week of May as total 125 companies will release their March quarter earnings next week including big names like Kotak Mahindra Bank, SBI Life Insurance Company, Adani Ports, Tata Steel, Hero MotoCorp, HDFC and UltraTech Cement.
Among others, Godrej Properties, Home First Finance Company, IDBI Bank, L&T Technology Services, Tata Chemicals, Varun Beverages, Adani Total Gas, Larsen & Toubro Infotech, RBL Bank, Adani Enterprises, Adani Green Energy, Adani Power, Adani Transmission, Coforge, CreditAccess Grameen, Tata Consumer Products, Dabur India, Godrej Agrovet, Steel Strips Wheels, Bandhan Bank, CSB Bank, DCB Bank, Avenue Supermarts, IDFC First Bank and Thyrocare Technologies will also declare quarterly earnings in the coming week.
3) Coronavirus Infections At Record Levels
The coronavirus infections have been hitting record levels every day, which is a major concern for the market and has been keeping the market in a range for last two-and-half-month, but there was a sigh of relief due to fall in cases in Mumbai, the financial capital of the country. The city reported less than 4,000 cases for the second consecutive day on Friday.
India reported more than 4.02 lakh confirmed cases, the biggest single-day rise on Friday, and nearly 40 percent of India's total COVID cases have come in April.
The recovery rate dropped further to below 82 percent but the recoveries saw the biggest single-day rise of 3 lakh and the increase in active cases on daily basis remained below the 1 lakh mark, at 98,482, on Friday.
So far the total COVID cases in the country stood at 1.91 crore with deaths at 2.12 lakh, while the active cases were at 32.69 lakh with recoveries at 1.57 crore.
Experts largely expect the COVID cases could peak out by May or June considering the increase in vaccination across the country.
4) Economic Data Points
The Markit Manufacturing PMI, and balance of trade for April will be released on Monday, while Markit Composite and Services PMI data will be declared on Wednesday. Experts feel Manufacturing and Services PMI could be lower than the previous level given the lockdown like restrictions imposed by states to contain the spread of virus.
Deposit and bank loan growth for the fortnight ended April 23, and foreign exchange reserves for the week ended April 30 will be released on Friday.
5) FII and DII Flow
The record rising COVID cases in the country resulted in an outflow of over Rs 8,500 crore by foreign institutional investors/foreign portfolio investors in April after buying in previous six consecutive months, but domestic institutional investors came to the market's rescue in the same period as they net bought more than Rs 9,900 crore of equities in April.
The flow indicated that there is a tussle between FIIs and DIIs, and experts largely feel the outflow in April considering COVID cases was obvious after healthy buying by FIIs in FY21, but it is nothing to worry about as the flow is expected to be strong in the coming years.
"It is important to track how FPIs and DIIs fare over the coming weeks as DIIs stole the show and gained dominance this time around. But our currency pair USD/INR has cooled off from Rs 75.5 to 74 against the US dollar and this may bring FPI buying back," said Nirali Shah, Head of Equity Research, Samco Securities.
6) Indian Rupee
The Indian rupee has strengthened sharply to close at 74.05 against the US dollar on Friday, after showing a consistent recovery of around 150 paise from around 75.50, the highest level of 2021 seen on April 21 following the pressure on the US dollar after the Federal Reserve maintained its dovish stance by keeping interest rates at zero levels. The currency completely shrugged off the fast-rising COVID cases in the country, which is surprising.
"Capital flows away from greenback and support from other Asian currencies was the major reason for an appreciation in our domestic currency during the week. The current range of Rs 74 to 75.5 against the US dollar reduces the need for any intervention from the RBI at the moment which would bring about stability in the currency markets, eventually favouring bulls on D-Street," said Nirali Shah, Head of Equity Research at Samco Securities.
Rahul Gupta, Head Of Research- Currency at Emkay Global Financial Services feels, for now, the focus will be on US economic data and a slew of IPOs due to hit the local equity market in the coming sessions. "The USDINR spot is hovering around 74 zone, there are no signs of Fed withdrawing policy accommodation so we expect the spot to remain sideways within 73.50-74.50," he said.
7) Technical View
Nifty50 corrected 1.77 percent on Friday and formed bearish candle on the daily charts, while during the week, it gained 2 percent and witnessed bullish candle formation on the weekly scale.
Experts feel the momentum could remain in favour of bulls if the index sustains above 14,600 in the coming days. In that case, the index can march towards 15,000 mark again, but in case it decisively breaks 14,600, there could be sharp selling pressure.
"The recent bounce is certainly encouraging but sustainability above 15,000 is critical in Nifty for any directional upmove else consolidation will continue. On the downside, 14,200 will continue to act as a major cushion," said Ajit Mishra, VP Research at Religare Broking.
He reiterated his view that one can stay with defensive names and keep a check on the leveraged positions.
8) F&O Cues
Maximum Call open interest was seen at 15,000, 14,900 and 14,800 strikes, while maximum Put open interest was seen at 14,000, 14,500 and 14,600 strikes.
Call writing was seen at 15,000, 14,800 and 14,900 strikes with Call unwinding at 14,100 and 13,900 strikes. Put writing was seen at 14,000, 13,900 and 14,200 strikes with Put unwinding at 14,900, 15,000 and 15,200 strikes.
The options data indicated that the Nifty50 could see a wider trading range of 14,000, which is a crucial support level, to 15,200 level on the higher side, while the near term support level could be 14,500 and resistance at 15,000.
"On the rollover front, the Nifty started the new series with almost 9 million shares, which is marginally higher than the last series. However, Bank Nifty open interest has declined significantly compared to the last series while the roll spread has declined across the board," said ICICI Direct which believes after significant volatility in the April series, the market may be heading for some consolidation before fresh directional move.
"On the options front, the Call base for the weekly as well monthly expiry is highest at 15,000 Call strike, which should remain a critical resistance. Since mid-March, the Nifty has remained largely in the range of 14,300-14,900 while breach of the range should trigger a fresh directional bias. However, on an immediate basis, we believe highest Put base of 14,500 may act as support," the brokerage said.
Volatility in the markets remained higher near 23 levels last week due to ongoing short covering and closed the week at 23.03 levels compared to 22.69 levels on previous Friday. "These levels of volatility suggest a cautious sign. Going ahead, a fresh uptrend should be expected only if volatility index starts subsiding," the brokerage said.
9) Corporate Action and IPO
Here are key corporate actions taking place next week:
The bidding for PowerGrid InvIT IPO will continue till May 3. The issue so far subscribed 27 percent.
10) Global Cues
Here are key global data points to watch out for in the coming week:
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