Barring the fall seen on Friday, Dalal Street bulls have had a good time since the last month due to continued buying by foreign investors and largely better corporate earnings. However, the overall trend for the market remains positive, but there are a series of events, economic data points, and earnings due next week. Therefore, some volatility in the markets is likely, according to market participants.

The Week:

-Last week from May 2nd to 5th, the Indian stock market went through a bumpy ride because of a lot of ups and downs.

-On May 5, the benchmark indices closed with a 1% decline, reversing the gains from the previous day.

-The banking and financial stocks suffered a big drop due to the MSCI plan for HDFC and HDFC Bank (Explained in next week’s segment), which made people scared that money might flow out of the merged entity.

-This caused HDFC twins to lose a whopping ₹64,000 crore of their market value in just one day!

-The BSE Sensex fell 695 points to 61,054, while the Nifty50 dropped 187 points to 18,069.

-The market closed flat for the week.

What Next:

But next week, there will be some events and news that might cause the market to be volatile, even though things have been good so far.

Next week, there are some important things happening in the world of finance. The Bank of England will be doing a review, and lots of Indian companies will release their results. There will also be some big news about the economy, and an MSCI index review. Investors will also be keeping an eye on the primary market, as Mankind Pharma is expected to make its debut.

Also Read: Why This Fundamentally Strong EV Stock is on a Bullish Run in a Bear Market?

Here are the major factors that will drive both bulls and bears on Dalal Street next week:

Global Markets:

Domestic equities will take cues from the trend in global markets. A slew of key economic data points are scheduled to be released in the US, UK, and China, which will decide the course of action in the respective markets.

China Trade Data:

-China will release its trade data on May 9,
-inflation numbers on May 11, and
-current account balance on May 12

Macro Data:

-The consumer price inflation print for April will be released in the US on May 10,
-along with the monthly budget statement and initial jobless claims.
-India will release its consumer price inflation number for April and industrial production data for March.

Bank of England Review:

-The Bank of England is scheduled to meet to review its policy and announce an interest rate decision on May 11.

Q4 Earnings:

Next week, many companies are set to release their earnings reports for the fourth quarter. Here are some of the companies whose earnings will be watched closely:

Larsen & Toubro
Dr Reddy’s Laboratories
Asian Paints
Eicher Motors
Tata Motors
Cipla
Vedanta
Hindustan Petroleum Corp
Siemens
Godrej Consumer Products
UPL
Lupin
Pidilite Industries
Canara Bank
Apollo Tyres
Raymond

In addition, some companies like
-Hero MotoCorp,
-Britannia Industries,
-Adani Power, and
-Paytm
already released their earnings on Friday.

The market will be closely monitoring these earnings reports as they can have an impact on the stock prices of these companies and the overall market.

Institution Fund Flows:

-India’s stock market was the worst performer at the beginning of 2023.

-However, in April, it became the best-performing market due to strong foreign institutional investments.

-In just 7 trading sessions, foreign institutional investors (FIIs) invested $190 crore USD in Indian equities.

-FPIs invested ₹10,850 crores in the Indian market during the trading week.

-FIIs have bought ₹5,528 crore worth of Indian equities.

-However, DIIs have turned into net sellers in domestic equities.

-Analysts predict that FPIs will continue to buy in India due to the appreciation of the rupee and good Q4 results.

-The steady domestic flows also contributed to the increase in capital flows in India.

MSCI Index Review:

There will be a review of the MSCI Index, which could also impact the market.

-The MSCI index review is scheduled for May 11th, and foreign investors will closely monitor it to adjust their portfolios.

-Adani Total Gas and Adani Transmission will be in focus during the review as MSCI is expected to reduce their free float.

-MSCI sees Adani Total Gas’ free float at 14% against 25% earlier

-for Adani Transmission, it sees it at 10% against 25% earlier.

-The reduction in free float for Adani Total Gas and Adani Transmission during the MSCI index review may impact their stock prices negatively as it could lead to lower liquidity and increased volatility.

-HDFC Bank and Housing Development Finance Corporation will also be in the limelight as MSCI is expected to add the bank to its large-cap segment.

-The addition of HDFC Bank to MSCI’s large-cap segment with an adjustment factor of 0.5 could result in outflows of $150-200 million, as predicted by Nuvama Alternative & Quantitative Research.

-This means that foreign investors may sell their shares in HDFC Bank, resulting in a decrease in its stock price.

-However, being added to the large-cap segment may also bring more visibility and interest from institutional investors, which could potentially drive up the stock price in the long term.

Corporate Actions:

There are some corporate actions scheduled for next week that may impact the stock prices of the companies involved. Here are some of the important ones to watch out for:

-On May 9, Oracle Financial Services stock will trade ex-date for the interim dividend of Rs 225 that the company announced.

-On May 10, Coforge and Laurus Labs will trade ex-date for their respective dividends of Rs 19 and Rs 1.20.

-On May 11, IndiaMART InterMESH will trade ex-date for the Rs 20/share final dividend that was announced last week.

Investors should keep an eye on these corporate actions as they can affect the stock prices of these companies.

Primary Market:

-Investors will be keeping an eye on the primary market, as Mankind Pharma is expected to make its debut, which could impact the market sentiment.

-There are two SME IPOs, De Neer Tools and Innokaiz India, which will open for subscription next week.

The Technicals:

-According to Sameet Chavan, head – of technical and derivatives, at Angel One, buying may resume at key support levels if there is no aberration globally.

-The 18000 and 17900 levels are likely to be crucial support levels for the 50-stock index, while the sturdy wall once again stands at 18150-18250, Chavan said.

-On the weekly chart, the Nifty formed a small negative candle with a long upper shadow, hinting at the possibility of more weakness in the coming sessions.

-Nagaraj Shetti, Technical Research Analyst at HDFC Securities, believes the market may have formed a bull trap, as the Nifty failed to sustain above the strong overhead resistance of 18,200 levels on Friday after sustaining above it on Thursday.

It will be interesting to see how things shape up in the first half of the week.

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