Week Ahead: Fourth Quarter Results, Iran-Israel Conflict, Global Signals Among Key Market Triggers This Week

With April quickly coming to an end, investors will be keeping a close eye on several stock market triggers in the fourth week of the month, with the ongoing January-March quarterly results for the fiscal year 2023-24 (Q4FY24), domestic and global macroeconomic data, developments surrounding general elections 2024, impact of the Israel-Iran conflict, crude oil prices, US bond yields and global signals.

Domestic markets moved lower on excessive volatility, losing more than one and a half percent on weak global cues. The tone was negative from the start, but it deteriorated further as world indices fell, but the recovery on Friday saw some losses.

Benchmark indices Nifty 50 and Sensex touched levels of 22,147 and 73,088.33 respectively. Nifty 50 and Bank Nifty broke their four-week rising streak amid escalating geopolitical tensions in the Middle East.

Also read: IT Jobs Summary FY24: Headcount drops by 63,759 at TCS, Infosys and Wipro; successively phased out

US rate-sensitive IT stocks fell 4.71 percent this week, their second worst week in 12 months, due to dwindling hopes for early US rate cuts and softer reports from market leaders TCS and Infosys. Overall, all major sectors felt the pressure, with IT, real estate and banking among the biggest losers. The broader indices also witnessed pressure and declines in the range of 1.4 percent to 2.7 percent.

‘Optimism prevailed with hopes of limited prospects for escalation of tensions between Iran and Israel. However, the domestic market failed to compensate for the losses incurred last week. Globally, caution remained necessary as the situation in the Middle East remains fragile,” said Vinod Nair, head of research at Geojit Financial Services.

”Mid- and small-cap stocks also corrected, highlighting concerns about premium valuations. Muted fourth-quarter earnings expectations and weak IT results could extend consolidation. Large caps, given stable earnings, can provide solace for investors,” Nair said.

Also read: Reliance Q4 Results Preview: Revenue, EBITDA up 10% YoY on retail and telecom growth; O2C biz probably stronger

In terms of primary markets, a number of initial public offerings (IPOs) and listings are planned in the motherboard and small and medium enterprises (SME) segments. From a domestic and technical perspective, the week will be crucial as investors will look at economic indicators and the latest corporate results.

Overall, analysts expect volatility to continue ahead of quarterly results and said the Nifty 50 needs sustainability at 22,300 before it can recover. Experts advise traders to prefer a hedged approach and wait for clarity.

These are the main triggers for the stock markets in the coming week:

Fourth quarter results, macro data

The ongoing earnings season for the fourth quarter of 2024 will be a major factor in driving the market movement. Some major companies will announce their quarterly results such as Reliance Industries, Bajaj Finance, Tech Mahindra, Nestle India, HCL Technologies and Maruti Suzuki, among others. On the macroeconomic front, the Indian Purchasing Managers’ Indices (PMI) figures will be released.

4 new IPOs, 5 listings for D-Street

In the motherboard segment, JNK India’s IPO will open for subscriptions, while Vodafone’s FPO will close on April 22. In the SME segment, Varyaa Creations IPO, Emmforce Autotech IPO and Shivam Chemicals IPO will be open for bids.

Among the listings, shares of Vodafone FPO will debut on BSE, NSE. Among SMEs, shares of Greenhitech Ventures, Birdy’s IPO, Ramdevbaba Solvent IPO and Faalcon Concepts IPO will debut on SME platforms this week.

FII activity

According to exchange data, foreign institutional investors (FIIs) were net sellers last week, while domestic institutional investors (DIIs) were buyers last week. Foreign portfolio investors (FPIs) have been net sellers in Indian markets due to high US inflation in March and rising US bond yields.

”A major trend in FPI activity this month is that FPIs have turned sellers into debt after months of sustained buying. In April to 20, FPIs sold debt worth 12,885 crore. This is again due to rising US bond yields and concerns over rupee depreciation,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Higher-than-expected inflation in the US has dampened hopes for interest rate cuts. This, together with the resulting spike in bond yields (the 10-year rise above 4.6 percent), led to major selling in the Indian cash market, according to the market expert.

Global signals, conflict between Iran and Israel

Escalation in the conflict between Iran and Israel led to profit booking in the markets, with Israel attacking Iran and creating uncertainty and fear in the market. The major US indices S&P 500 and Dow recorded six consecutive daily declines, the longest losing streak since October 2022.

“A possible delay in a US rate cut due to higher-than-expected inflation, robust retail sales and high oil prices dampened sentiments. This was reflected in notable increases in the dollar index, US bond yields and yellow metal prices,” said Vinod Nair of Geojits.

This week also promises to be crucial for the market as ongoing concerns about the Iran-Israel conflict come to the fore. If tensions escalate significantly, there is a risk of panic selling and increased volatility in global stock markets, said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.

As the month of April draws to a close, Purchasing Managers’ Indices (PMI) figures for major countries around the world, including the US and the Eurozone, will be released. The increase in US gross domestic product (GDP) and corporate profits will be other key events driving the market.

On the macroeconomic front, the People’s Bank of China will announce the prime rate for one- and five-year loans on April 22, 2024. The Bank of Japan will announce its interest rate decision on April 26, 2024.

US unemployment claims will be announced on April 25, 2024, and movements in US bond yields and the dollar index will be key factors influencing market sentiment.

‘Among the major world indices, the Dow Jones Industrial Average (DJIA) is hovering around its medium-term support zone of 100 DEMA, i.e. 37,800, and if it fails, the 36,900-37,200 zone would be the next major support zone. In case of recovery, the 38,150-38,500 zone would act as a strong hurdle,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.

Oil prices

Oil prices are up 16 percent so far this year near $90 a barrel, with supply-side concerns high given escalating tensions in the Middle East between Iran and Israel and continued attacks on energy infrastructure between Ukraine and Russia. The market will keep a close eye on fluctuations in crude oil prices as geopolitical events regularly impact them, analysts said.

Corporate action

In the coming week, shares of several companies including Fortis Malar Hospitals and ICICI Securities will trade ex-dividend, while other companies such as Tip Industries and IIFL Finance will declare a buyback and a rights issue respectively. Some other companies will trade ex-bonus and ex-split. View the full list here

Technical view

Nifty 50 has skillfully defended its upward supportive trendline and is closely aligned with the psychologically significant 22,000 mark. It also showed a bullish reversal signal, which resembles a Bullish Piercing Line pattern on the daily charts. This indicates potential bullish momentum after a correction phase.

”Looking ahead, the next resistance level to watch is around 22,300, with an opportunity to extend towards 22,500 if continued momentum continues. The immediate support is 22,000. By analyzing the daily chart, a Piercing Line pattern emerges, further strengthening the bullish sentiment,” said Arvinder Singh Nanda, Senior Vice President, Master Capital Services Ltd.

The indicator has crossed the 55-day exponential moving average (EMA) of 22,067, indicating a positive short-term trend. A close above this moving average strengthens the bullish outlook, according to Nanda.

Market experts also highlighted that the pace of rise has been gradual over the past four months and Nifty has entered the lower band of the rising channel but managed to close above the same level.

”We need sustainability above the short-term moving average, i.e. 20 DEMA, which is currently around 22,300, to strengthen the recovery. On the other hand, we expect the zone 21,500-21,700 to act as a buffer. Meanwhile, traders should continue with a hedged approach amid the mixed indications and wait for clarity,” said Ajit Mishra of Religare Brokings.

According to Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, there is a lot of money waiting on the sidelines to enter the domestic market as India’s long-term growth story provides an opportunity for investors to deploy funds after a healthy correction. .

The Bank Nifty index showed strong bullish momentum and formed a bullish penetrating candlestick pattern from the support level of 46,500. Immediate resistance for the index is at 48,000, where there is a significant increase in open interest on the call side, indicating a potential hurdle.

”The index has provided immediate support between 47,200 and 47,000. Any pullback towards this support zone is seen as a buying opportunity, indicating continued bullish sentiment if these levels hold,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

Disclaimer: The above views and recommendations are those of individual analysts and brokerage firms, not Mint. We advise investors to contact certified experts before making investment decisions

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