As the high-stakes’ Lok Sabha election results approaches closer, the volatility in the stock market is weighing on investor’s sentiments, both domestically and across borders. Foreign outflow from Indian equities continues unabated amid the rising India VIX index and uncertainty of the election outcome.
In the fourth week of May, investors will keenly eye the ongoing the January-March quarter results for fiscal 2023-24 (Q4FY24), voter turnout, domestic and global macroeconomic data, foreign fund outflows, crude oil prices, and global cues.
Domestic equity benchmarks traded firmly, drawing strength from lower levels as investors aligned with the broader bullish market outlook. Nifty 50 reclaimed back 22,500 level and the Sensex closed the week above the 74,000 level. On the weekly front, the BSE benchmark climbed 1,341.47 points or 1.84 per cent, and the Nifty went up by 446.8 points or two per cent.
The Nifty index closed the week at 22,506, while the Bank Nifty climbed by 1.68 per cent to end at 48,199. Nifty Midcap hit an all-time high at 11,347 and posted the biggest weekly gain in eight months and Nifty’s small-cap closed the week at 17,009 level. Nifty Realty and Nifty Metal hit a record high this week gaining seven per cent each. Nifty FMCG was the only sectoral indices that closed in red.
Initially, the market experienced some volatility due to a significant increase in the India VIX, which rose by more than 11 per cent, and concerns over low voter turnout in the ongoing general elections, which heightened fears of an unstable government at the center. However, market sentiment improved following comments from key government officials.
‘’Investors are expressing optimism regarding potential interest rate cuts in 2024, supported by favourable US consumer inflation data and improved jobless claims figures, which have also contributed to a surge in gold prices and strengthened the stock market rally. Uncertainties persist regarding the timing of US Fed rate adjustments…Amidst ongoing uncertainties surrounding election results and quarterly earnings, we anticipate continued volatility in the near term,” said Vinod Nair, Head of Research, Geojit Financial Services.
In the coming week, primary markets will attract investors as some new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segment. The week will be critical from the domestic and technical point of view as investors will global indicators and the latest corporate results.
Overall, analysts expect the volatile tone to continue for Nifty 50. However, the index may present an attractive opportunity above the 22,650 level in case of profit booking. Experts advise traders to adjust their positions accordingly and maintain a “buy on dips” strategy.
Here are the key triggers for stock markets in the coming week:
Q4 Results, US Fed chair Speech
Domestically, the last major batch of Q4 earnings reports will drive stock-specific movements. Zee Media, Sun TV Network, NTPC, Hindalco, Hindustan Copper, JK Lakshmi Cement, ITC, IndiGo, Sun Pharmaceuticals, among others are some of the big names in the list.
US Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech on Monday, May 20, 2024, which is expected to further influence market sentiments. Last week, Powell tested positive for COVID-19 and is…
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