Dalal Street Week Ahead: Hyundai IPO, US retail sales, ECB interest rate decision, China GDP among 10 factors to watch

Dalal Street Week Ahead

The market entered the phase of consolidation, falling moderately in the week ended October 11 amid valuation concerns, the subdued outlook for Q2FY25 earnings, BJP's win in Haryana polls and consistent FII selling. This was after the severe correction of 4.5 percent seen in the previous week. The change in policy stance by RBI during the week does not indicate the possibility of a rate cut in the near term.

In the coming week starting from October 14, the market is expected to remain consolidative and try to rebound with a fall in volatility. The market participants will focus on the September quarter earnings (with a focus on heavyweights like Reliance Industries, Infosys, and HDFC Bank), Hyundai's mega IPO from India unit, US retail sales, ECB interest rate decision, China's Q3 GDP, and oil prices.

The BSE Sensex was down 0.4 percent at 81,381, and the Nifty 50 fell 0.2 percent to 24,964, while the broader markets outperformed the benchmark indices, as the Nifty Midcap 100 and Smallcap 100 indices gained 1.3 percent each.

Overall, Siddhartha Khemka, Head - Research, Wealth Management at Motilal Oswal Financial Services expects markets to consolidate at higher zones and take cues from global factors & result season.

The preview of Q2 results suggests a weaker performance on a quarter-on-quarter basis. The risk of downgrades is increasing, which could reduce India’s premium valuation in the short to medium term, Vinod Nair, Head of Research at Geojit Financial Services. said.

Here are 10 key factors to watch:

Corporate Earnings

The major focus next week will be on the September 2024 quarter earnings that already kicked off by Tata Consultancy Services last week by announcing in-line numbers. Now all eyes will be on Infosys results next week & management commentary on full year revenue growth guidance. Other Nifty 50 companies that will release their quarterly earnings scorecard include Reliance Industries, Infosys, HDFC Bank, Kotak Mahindra Bank, HCL Technologies, HDFC Life Insurance Company, Bajaj Auto, Axis Bank, LTIMindtree, Tech Mahindra, Nestle India, Wipro, and Tata Consumer Products, which all cumulatively have more than 38 percent weightage to the index.

HDFC Asset Management Company, Jio Financial Services, L&T Finance, Angel One, Sterling and Wilson Renewable Energy, Bank of Maharashtra, PVR INOX, Aditya Birla Money, L&T Technology Services, Mphasis, Ceat, Central Bank of India, Havells India, Indian Overseas Bank, Jindal Stainless, Polycab India, Tata Chemicals, Tata Communications, ICICI Lombard General Insurance Company, Jindal Saw, L&T Finance, Oberoi Realty, Zee Entertainment Enterprises, MCX India, and RBL Bank will also announced numbers.

CPI Inflation

On the economic data front, the market participants will keep an eye on the CPI and WPI inflation numbers for September releasing on October 14. The CPI inflation increased slightly to 3.65 percent in August against 3.6 percent in the previous month, while the wholesale inflation dropped to four month low of 1.31 percent in August compared with 2.04 percent in July.

Furthermore, the Balance of Trade data for September will be announced on October 15, and passenger vehicles sales numbers for September on October 17, while the bank loan & deposit growth for fortnight ended October 4, and foreign exchange reserves for week ended October 11 will be released on October 18.

Global Economic Data

Globally, the markets on Monday will first react to monthly inflation, PPI, and vehicle sales data from China which announced on October 13. In the week ahead, the key focus will be on the US retail sales, and weekly jobs data.

Apart from that, European Central Bank will announce its interest rate decision on October 17. Most market experts see the central bank cutting interest rate by 25 bps to 3.25 percent given the inflation falling below its 2 percent target, and most ECB officials already hinted for rate cut.

Apart from Europe's inflation, China's GDP growth and industry capacity utilisation for Q3-2024 and retail sales for September, as well as Japan and UK's inflation will also be watched. Most economists see the inflation of the world's second largest economy falling a bit in Q3, from 4.7 percent recorded in Q2 which already slowed down from 5.3 percent growth seen in Q1.

Oil Prices

The black gold prices are likely to be volatile at higher levels amid geopolitical tensions in the Middle East region, and expectations of more stimulus measures from China, while the experts ruled out major spike in prices. "As OPEC is having spare capacity to deal with any war like situation we see prices will fizzle out soon as the demand still remains weak, so rally would be unlikely to sustain in medium term," Mohammed Imran, Research Analyst at Sharekhan by BNP Paribas said.

Brent crude futures, the international benchmark for oil prices, dropped 1.27 percent during the week to $79.04 a barrel, after 9.1 percent rally in the previous week. The prices were below 50 and 200-day EMA (Exponential Moving Averages) but above short term moving averages (10 and 20-day EMAs).

FII Flow

The street will also watch the institutional flow activity at FIIs (foreign institutional investors) and DIIs (domestic institutional investors) desks. FIIs sold Rs 58,395 crore worth shares in the cash segment in October so far, the highest every monthly outflow since March 2020, following increase in the US 10-year treasury yield (post spike in core inflation and geopolitical concerns). FIIs also shifted some money to undervalued Chinese equity markets post its fiscal stimulus measures. Hence, the outflow, if any, going ahead is likely to have some impact on the markets, experts said.

On other side, DIIs continued their strong support to equities, managing to compensate the FIIs outflow as they bought Rs 57,792 crore worth shares in the current month (the highest ever in a single month). Experts expect the continued domestic inflow to provide great support for equity in every major fall given the strong economic growth.

During the passing week, FIIs net sold Rs 27,675 crore worth shares, which fully compensated by the DIIs who bought Rs 31,364 crore worth shares.

Hyundai Motor India IPO

Meanwhile, for the primary market, the week ahead is going to be a historic one as Hyundai Motor India's mega IPO is set to hit Dalal Street on October 15 till October 17 with a price band at Rs 1,865-1,960 per share. Parent firm Hyundai Motor Company is going to raise Rs 27,870 crore ($3.3 billion, the highest ever in Indian IPO history) through Indian unit's IPO which consists of entirely offer-for-sale.

Also read: IPO-bound Hyundai India to pump in Rs 32,000 crore, raise capacity to 1.1 million units

Lakshya Powertech and Freshara Agro Exports from the SME segment will also open their IPOs next week on October 16, and October 17, respectively, while Pranik Logistics will close its public issue on October 14.

On the listing front, Garuda Construction and Engineering will debut on the bourses on October 15, while the trading in Shiv Texchem, and Pranik Logistics shares will commence on the BSE SME and NSE Emerge effective October 15 and October 17, respectively.

Technical View

Technically, overall the Nifty 50 is likely to be in the range of 24,700-25,500 in the coming week. On the higher side, the 25,050 (50-day EMA) is expected to be crucial for upward journey initially towards 25,200-25,300 area, followed by 25,500 being the critical hurdle, however, on the downside, 24,900 is an immediate support for the index. The 24,800 is likely to be rising trendline support, followed by 24,700 (the last week's low) and 24,500 (20-week EMA) being crucial support zones. The index formed High Wave kind of candlestick pattern following big bearish candle in the previous week, indicating the reduction in selling pressure and raising the possibility of some bounce in the start of next week.

F&O Cues

The weekly options data indicated that 25,000 is likely to play a key level for the market direction going ahead, with a hurdle at 25,500 on the higher side and support at 24,700 on the lower side.

On the Call side, the 26,000 strike holds the maximum open interest followed by the 25,000 and 25,500 strikes, with maximum writing at the 26,000 strike, followed by the 25,000 and 25,800 strikes. However, on the Put side, the maximum open interest was observed at the 25,000 strike, followed by the 24,000 and 24,500 strikes, with a maximum writing at the 24,000 strike, and then the 24,700, 24,100 and 24,900 strikes.

India VIX

Volatility cooled down considerably and fell below all key moving averages during the week after a spike above 15.5 level, giving comfort for bulls to take the market higher. The India VIX, the fear index, was down by 6.42 percent to 13.22, the lowest level since the week ending September 27, after 18.1 percent jump in previous week.

Corporate Action

Here are key corporate actions taking place next week:

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