Last week, after a few hovering sessions, the market ended on a positive note while tracking the rise in global signals. Sensex reached 54,326.39, an increase of 1534.16 points or 2.91%. Nifty 50 closed at 16,266.15, up 456.75 points or 2.89%.
Ajit Mishra, VP of Research. Tonare Broking said, “Market ended a five-week streak of declines and gains of more than 3% amid extreme volatility. Global Signals viz. fear of aggressive US Fed rate hike, Russia-Ukraine crisis, largely determine the trend and keep their participants calm. Finally, the benchmark indexes, Nifty and Sensex, finished 3.1% and 2.9% higher, closing at 16,266 and 54,326. Most industry indexes, with the exception of IT, participated in the recovery, and broader indexes also recorded gains in the 3-4% range. “
Here are 10 factors that will trigger market performance this week:
Income:
The market is currently in the late stages of earnings season. Companies such as Divis Laboratories, SAIL, Adani Ports, Grasim, Coal India, Zeel Entertainment, Gail and JSW Steel, will release their numbers for the week.
Expired F&O:
The week will be the focus amid the May series derivatives expiry, scheduled for May 26. Market volatility is expected to remain higher as investors to the F&O expiration date.
ICICI Direct in its derivatives weekly report said that looking ahead, a move above the VWAP level of the 16350 series will be critical to continue the settlement week rally.
On a data perspective, ICICI Direct instructs that FII’s short positions have plummeted as their net shorts in index futures have dropped to 77,000 contracts from 1.25 lakh contracts along with short positions. bullish position in the stock futures segment. Hence, further upside could be towards 16800 if Nifty sustains above 16350
Furthermore, ICICI Direct explains that the volatility index has increased further and tested 25 levels before closing the week near 23. Considering the rollover activity, intraday volatility is likely to remain higher. However, with low open interest in both Nifty and Bank Nifty, fresh accumulation in the May series should pave the way for the next directional movement.
Inflationary:
Inflation continues to dominate market sentiment across the board. CPI inflation surged to 7.79% in April galloping to an 8-year high due to rising food prices.
WPI inflation rose to its highest level in at least 9 years to 15.08% in April as prices of metals, crude oil, food, etc. This will also be the thirteenth consecutive high of a double-digit gain.
In addition, markets will respond to government excise tax cuts by 8 per liter of gasoline and equal to 6 per liter for diesel engines.
Minutes of the FOMC meeting:
The markets will also react to the Federal Open Market Committee Meeting Minutes scheduled for May 25. The FOMC Meeting Minutes are a detailed record of the committee’s policy-setting meeting. held about two weeks before.
Foreign investors sell bias:
Foreign investors were net sellers for the whole month. Unabated foreign fund outflows led to a weakening of the rupee and added to market volatility.
From the beginning of the year until now, FPI has generated a huge number 1,62,299 crore from Indian stock exchange.
List:
The two companies are going to market this week. Delhivery and Venus Pipes & Tubes are most likely to be listed on Tuesday.
Delhivery launched 5,235 crore for initial public offering, while Venus’ The IPO of 165.42 crore also started earlier this month. Both IPOs are fully registered.
IPOs:
Digital Signature Validator, eMudhra’s 412.79 crore will continue to bid until May 24. Meanwhile specialty chemicals producer Aether Industries is set to launch its initial public offering (IPO) for registration. on May 24th and the bidding will continue until May 26th with a price range 610 to 642 per equity share.
US GDP data:
US gross domestic product (GDP) data for the first quarter is expected on May 26, 2022 i.e. next Thursday.
Dollar Index:
After the US currency climbed to a record 20-year high, the greenback posted a retracement. The performance of the Rupee against the dollar will be closely watched.
The dollar index remains firm near above $102, said Jateen Trivedi, VP Research Analyst at LKP Securities. And the Rough around $110 gives the rupee some strength. Rupees continue to resist above 20dma around 77.25 hence some upside can be witnessed to 77.25 as rupee continues to test 20dma resistance closing above 77.25 will change the trend direction of the rupee until the rupee is generally still weak. Rupees can be seen in the 77.25-77.75″ range
Lively situation of China:
China’s rapid rise in Covid-19 cases continues to pose a threat to the global market as industry activities are suffering due to poor manufacturing and supply chain constraints. China is currently imposing strict sanctions and restrictions in key regions. Any resurgence in Covid cases could dampen market sentiment.
What do experts say about this week’s trading session?
Vinod Nair, Head of Research at Geojit Financial Services said, “This week the domestic market has moved in tandem with the global markets. Worries about a global economic slowdown and interest rate hikes have taken hold. The UK’s retail inflation numbers spike, along with the Fed’s Chairman’s reassurances on easing inflation, dented risk sentiment on fears of stronger interest rate hikes Recent earnings reported by US retailers reflect the heat of high retail inflation, fueling volatility on Wall Street FIIs continue selling momentum as they chase high-yield US bonds added volatility to the Indian market, however, an improving outlook in Chinese tech stocks and a cut in the key interest rate by the People’s Bank of China to support growth added to the optimism. important for emerging markets.”
Mishra hopes for unhappiness will remain high due to the scheduled monthly expiration. Besides, updates related to monsoon will also be focused. In line with prevailing trends, global elements viz. The activity of the global markets, especially the US, China’s COVID updates and Russia-Ukraine news will remain on the radars of the participants.
“The market has seen strong swings in the 15,700-16,400 range and is now trading closer to the upper band. Participants should wait for a decisive close above 16,400 for a change in trend. In the market In case of breakout, the 16,650-16,800 zone acts as a Mishra added.
ICICI Direct in its weekly market outlook said, “Going forward, easing volatility should help Nifty break through the 16400 level and towards the 16800 level in a nonlinear trend. Buying falls to the low level. 15800-16000 will be a bonus as strong support exists around the 15600 level.”
What should investors do?
“Investors are now investing cautiously, value stocks should do well in this consolidation phase, supported by moderate valuations,” Nair said.
Meanwhile, Mishra guided that among sectoral, defensive indexes such as FMCG and pharmaceuticals look set to rise further while others could continue to trade mixed. Traders should align their positions accordingly and maintain the positions of both sides.
Which stock to choose?
As reported by ICICI Direct, auto, metals, BFSI and capital goods stocks offer favorable risk-reward at the moment.
The report said, “In the large capital group, we prefer Reliance, SBI, Kotak bank, ITC, Maruti Suzuki, Hindalco, Cipla sectors while in the medium group we prefer ABB, Ashok Leyland, Apollo Tires, Axles Automotive, Hindustan Aeronautics, Indian Hotel, PVR, Tata Chemicals, SRF, NMDC, Elecon Engineering.”
