Market Sentiment Next Week to be Influenced by Q2 Earnings, Key Economic Data, and FII Flows

Alayaran.com
November 10, 2024

In the upcoming trading week, the Indian equity market is expected to be driven by a combination of domestic and global economic indicators, the final wave of September quarter earnings, and the trading activities of foreign institutional investors (FIIs), according to market analysts.

Analysts predict that key macroeconomic data releases will play a pivotal role. India's Consumer Price Index (CPI) and Index of Industrial Production (IIP) are due on November 12, followed by the Wholesale Price Index (WPI) on November 14. Globally, the US inflation report on November 13 could influence the Federal Reserve's policy decisions, impacting markets worldwide.

Santosh Meena, Head of Research at Swastika Investmart Ltd, highlighted the significance of these data points, noting that with the major Q2 earnings announcements behind us, the focus will now shift to these economic indicators and the remaining corporate earnings. Companies such as Bank of India, BEML, Hindalco Industries, ONGC, Apollo Tyres, and Brainbees Solutions, the parent company of FirstCry, are among those set to declare their quarterly results.

The performance of US bond yields and the dollar index will be crucial, especially after their recent surge post the US election outcomes, influencing investment flows into emerging markets like India. "FIIs activity will remain a critical driver for the Indian equity market in the near term," Meena added.

Other factors influencing market trends include movements in global oil benchmark Brent crude and the rupee-dollar exchange rate. Palka Arora Chopra from Master Capital Services Ltd emphasized the importance of both domestic and international economic data, including US CPI, core CPI, initial jobless claims, UK GDP, and China's industrial production data.

Last week saw the BSE benchmark dip by 237.8 points (0.29%) and the Nifty by 156.15 points (0.64%). V K Vijayakumar from Geojit Financial Services attributed this weakness to the continuous selling by FIIs, a trend that has persisted into this month.

Siddhartha Khemka of Motilal Oswal Financial Services Ltd anticipates a sideways market trend due to mixed global cues and lackluster quarterly results, though he expects stock-specific movements due to the final batch of Q2 earnings announcements.

FPI Trends

Foreign Portfolio Investors (FPIs) have continued their withdrawal from Indian equities, with nearly Rs 20,000 crore being pulled out over the last five trading sessions, driven by higher valuations of domestic stocks and a shift in investment towards markets like China. This has led to FPIs turning net sellers in the equity market, with outflows totaling Rs 13,401 crore in 2024 so far.

Market Capitalization Impact

The market capitalization of six out of the top ten most-valued firms in India eroded by Rs 1,55,721.12 crore last week, reflecting the bearish sentiment.

Trading Holiday

Investors should note that equity markets will be closed on November 15 for Guru Nanak Jayanti.

With inputs from PTI