Week Ahead: Nifty 50 & Sensex Brace for Q2 Results, FII Exodus, IPO Rush & Global Cues – Can Markets Bounce Back?
The Indian stock market faced its worst loss of 2024 so far, as corporate earnings disappointed, inflation worries mounted, and foreign investors withdrew funds to invest in China. This week, markets are preparing for a challenging time with multiple factors that could affect investor sentiment.
In the upcoming week, key triggers for investors include more second-quarter results (Q2 FY25), geopolitical tensions from the Israel-Iran conflict, foreign fund outflows, crude oil prices, global cues, and both domestic and global economic data.
Markets Review: Three-week Losing Streak
The Indian stock market has been on a downward trend for three weeks. The Nifty 50 dropped to its lowest level since August, finishing last week at 24,854, down 0.50%. The Sensex also fell by 0.20%, closing at 81,224.75.
Weak earnings from major companies and rising inflation concerns were key factors dragging down the market. Inflation in India rose to 5.49% in September, compared to 3.65% in August. This was higher than expected and above the Reserve Bank of India’s 4% target, adding pressure on the market. However, falling crude oil prices helped cushion the market from further losses.
Despite a small recovery in banking stocks, overall market sentiment remained weak. Sectors like banking, financials, and real estate posted some gains, while auto, metals, and FMCG were the worst performers. Broader markets reflected a similar trend, with midcaps down nearly 1%, though small-cap stocks managed a slight gain.
Key Market Triggers This Week
- Q2 Results:
Investors will be focused on the earnings reports of several key companies, including HDFC Bank, Kotak Mahindra Bank, Tech Mahindra, and more. Analysts expect mixed results across sectors, with some companies performing better than others. Major companies like ITC, Hindustan Unilever, ICICI Bank, BPCL, HPCL, and Ultratech Cement will release their earnings this week, which could influence market trends. - IPO Activity:
There will be a lot of action in the primary market, with nine IPOs set to open this week, including the Godavari Biorefineries, Waaree Energies, and Afcons Infrastructure IPOs. Hyundai Motor India is also set to list its shares, along with two small and medium-sized enterprises (SMEs). - FII Activity:
Foreign Institutional Investors (FIIs) continued to sell Indian shares, offloading ₹21,823 crore in the cash segment last week, while Domestic Institutional Investors (DIIs) bought ₹16,384 crore. FII selling has been driven by India’s high valuations, with foreign funds shifting their focus to cheaper Chinese stocks. This trend is expected to continue in the short term, but experts say it presents a buying opportunity for long-term investors in large-cap financials, particularly in the banking sector. - Global Cues:
The US and UK stock markets ended last week in positive territory, with US markets reaching an all-time high. However, India has not followed this trend due to foreign fund outflows. Upcoming US data, including durable goods orders and jobless claims, as well as economic indicators from the UK and China, will be watched closely by Indian investors. - Oil Prices:
Global crude oil prices dropped sharply last week, their biggest weekly decline in a year, due to concerns over China’s slowing economy and mixed signals from the Middle East. Brent crude fell by 1.87%, settling at $73.06 per barrel, while US West Texas Intermediate (WTI) dropped 2.05% to $69.22 per barrel.
Corporate Action and Market Outlook
Several companies, including HCL Technologies, L&T Technology Services, and Dalmia Bharat, will trade ex-dividend this week, and some stocks will also go ex-bonus or ex-rights.
From a technical perspective, the Nifty 50 may consolidate after three straight weeks of declines, but the outlook remains negative unless it can decisively move above the 25,150 level. A break below 24,470 could push the index down to 24,000. Sector-wise, IT, pharma, and metals are showing strength, but the sustainability of the recent bounce in banking stocks is key.
Bank Nifty also started the week on a weak note but bounced back from its support levels, signaling strong buying interest. A move above 52,300 could push it towards 52,900, while support at 51,500 will be closely watched by traders.
In summary, the Indian stock market will face significant volatility this week due to multiple factors, including corporate earnings, foreign fund outflows, and global events. Investors are advised to take a cautious approach, keeping an eye on major market triggers for further direction.
