Dalal Street Week Ahead: RBI policy, auto sales, global PMI data among 10 key factors to watch

Market trend likely to be positive next week

The market had a strong close for the truncated week ended on March 28, as the benchmark indices gained 1 percent with participation from most sectors barring IT after consolidation in previous couple of weeks. In fact, the monthly expiry session for March derivative contracts had a good rally, indicating the market may be inching towards a record high soon.

Overall, the first week ahead of the new financial year FY25 is expected to be positive for the market with focus on auto sales data, manufacturing & services PMI numbers, RBI interest rate decision, and expectations for March FY24 quarter earnings, experts said.

The Nifty 50 rallied 230 points to 22,327, and the BSE Sensex jumped 819 points to 73,651, while the broader markets had a better week than benchmarks as the Nifty Midcap 100 and Smallcap 100 indices gained 1.6 percent and 1.4 percent respectively.

Meanwhile, the market performance for the fiscal year 2023-24 was quite strong with the Nifty 50 surging 28.6 percent, and the Nifty Midcap 100 index up 60 percent & Smallcap up 70 percent.

"Overall, we expect the market to continue its positive momentum with a focus on large-cap. With the start of the election in April, we believe government-centric stocks to be in focus. Auto stocks are likely to be in the limelight next week amid the release of monthly auto sales numbers," Siddhartha Khemka, head - retail research at Motilal Oswal Financial Services said.

Additionally, Vinod Nair, Head of Research, Geojit Financial Services said the market participants will closely monitor signals regarding policy rates, particularly from the RBI. Moreover, attention will be on India's Q4FY24 result forecasts, which are expected to indicate a healthy performance, he added.

Here are 10 key factors to watch:

Auto Sales

The new financial year FY25 will start with the auto sales data for the month of March. Hence, auto stocks including Maruti Suzuki India, Tata Motors, Hero MotoCorp, Eicher Motors, Ashok Leyland, Bajaj Auto, Mahindra & Mahindra and TVS Motor Company will be in focus.

Most brokerages expect double-digit on-year growth in the retail two-wheeler sales during March 2024 and single digit increase in passenger vehicles sales, but there may be subdued performance in commercial vehicle as well as tractor sales for March 2024.

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RBI Policy

The next important event to focus on next week would be the interest rate decision by the Monetary Policy Committee in its three-day meeting. All economists are of the view that there will be no change in policy rates on April 5 and any cut in interest rates going ahead will be majorly dependent on the US Federal Reserve action, but the commentary will be closely tracked.

CPI inflation in February eased to 5.09 percent from 5.10 percent in previous month, and the core inflation (inflation excluding food and fuel) dropped further to 3.3 percent from 3.6 percent during the same month.

Domestic Economic Data

Further, on the domestic front, the market participants will also keep an eye on final HSBC Manufacturing PMI data for March, releasing on April 2, and Services PMI numbers due on April 4. India's HSBC flash manufacturing Purchasing Managers' Index (PMI) jumped to 59.2 in March (the highest since February 2008), from 56.9 in February, while the flash services PMI dropped to 60.3 from 60.6 in February.

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Bank loan and deposit growth numbers for the fortnight ended March 22, as well as foreign exchange reserves for the week ended March 29 will be released on April 5.

Fed Chair Powell Speech

Globally, the markets participants will focus on the Federal Reserve Chair Jerome Powell speech scheduled on April 3. Also, there will be speeches by several other Fed officials next week.

In the last week's speech in San Francisco, Powell reiterated that the Federal Reserve is not in a hurry to go for a rate cut. With strong employment data, Fed wants to see inflation consistently reaching closer to their 2 percent target. In March policy meeting, Powell signalled three rate cuts this year, while investors started expecting the first rate cut in June 2024.

Global Economic Data

Further, the manufacturing and services PMI final data for March by several other nations including US and China will also be tracked by the participants. Unemployment rate, non-farm payrolls, JOLTs job openings & quits, and factory orders numbers in the US will also be watched.

Oil Prices

Meanwhile, the street will also focus on the oil prices as Brent crude futures jumped to the highest closing level since October 2023, rising 2.64 percent for the last week of March 2024 to close at $87.07 a barrel after a marginal decline in previous week. Technically, the prices sustained above the falling resistance trendline for yet another week and traded above all key moving averages. India is the net oil importer, hence consistent increase in prices is a risk.

In fact, the crude prices rallied for third consecutive month, rising 6.3 percent for March month and 13 percent in March 2024 quarter. This surge was attributed to OPEC+ output cuts and market anticipation of lower interest rates. Additionally, signs of Russia complying with OPEC production pledges, shifting the focus from exports to production, may further stimulate price increases in the crude oil market, said Ravindra Rao of Kotak Securities.

IPO

On the primary market front, the new financial year (FY25) will kick off by Bharti Hexacom IPO, but there will be no new IPO launch in the SME segment. Bharti Hexacom will open its Rs 4,275-crore public issue for three-day subscription on April 3, with a price band at Rs 542-570 per share.

In the SME segment, seven companies namely Radiowalla Network, TAC Infosec, Yash Optics & Lens, Jay Kailash Namkeen, K2 Infragen, Aluwind Architectural, and Creative Graphics Solutions India will close their initial public offerings next week.

Further, SRM Contractors will be the only company from the mainboard segment scheduled for listing next week on April 3, while there will be nine companies from the SME segment making the debut on the bourses which are Vishwas Agri Seeds, Naman In-Store (India), Vruddhi Engineering Works, Blue Pebble, Aspire & Innovative Advertising, GConnect Logitech and Supply Chain, Trust Fintech, Radiowalla Network, and TAC Infosec.

Technical View

Technically, given the Nifty 50 reclaiming 22,300 in the recent trading session with above average volumes and holding above downward sloping resistance trendline as well as trading above all key moving averages, now experts looked optimistic with all eyes on the record high of 22,526 next week. According to them, the immediate support is placed at 22,200 and key support at 22,000 mark.

"In Nifty, based on the daily charts, there is high volatility in the market near the all-time high of around 22,500 levels. However, there are indications that Nifty may find support from the lows and is expected to move up further," Arvinder Singh Nanda, Senior Vice President of Master Capital Services said.

On a weekly basis, Nifty formed a bullish candlestick pattern with a higher high, higher low formation on the weekly charts. Additionally, it remained above the 10-week EMA, which acted as a support on a closing basis. The next upside levels to be watched are around 22,550-22,650 in the next week, while immediate support is at 22,200-22,100 levels, Arvinder said.

F&O Cues

Options data also indicated that the Nifty 50 may face resistance at 22,500-22,600 levels in the new series, with support at 22,200 and 22,000 levels.

On the Call side, the maximum open interest was visible at 22,600 strike, followed by 22,300 & 22,500 strikes, with meaningful writing at 22,300 strike, then 22,700 & 22,600 strikes. On the Put side, the 22,300 strike owned the maximum open interest, followed by 22,000 & 22,400 strikes, with writing at 22,300 strike, then 22,400 strike.

Meanwhile, the India VIX, the fear gauge, rebounded with 5 percent uptrend to close the recent week at 12.83 level, after 10.74 percent correction in previous week, but still at comfort levels.

Corporate Action

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

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