Dalal Street to Face Multiple Influential Factors in Upcoming Week

Market Volatility Expected Amid US-Iran Deal Progress and Oil Price Movements

The Indian equity market rebounded last week, closing with moderate gains despite volatility, as efforts to ease Middle East tensions and a recovery in the rupee provided support. However, continued Foreign Institutional Investor (FII) selling and fears of tighter monetary policy due to higher input inflation capped the market's upside.

Key Market Indicators

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The broader markets outperformed the benchmark indices, with the Nifty Midcap 100 and Smallcap 100 indices rising 1.36 percent and 0.41 percent, respectively.

Sectoral Performance

The IT sector stood out as a clear outperformer, benefiting from attractive valuations following the recent correction. Realty, cement, and private banks also remained resilient, while FMCG and consumer durables underperformed due to concerns over WPI pass-through impacting margins.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Global Economic Data

The market is expected to witness volatility next week amid the monthly F&O expiry, while any update regarding the US-Iran peace deal could provide direction to the markets. Key global economic data releases include:

• US Core PCE and advance GDP data on May 28
• Europe's consumer confidence, economic & services sentiment, consumer inflation expectations, and selling price expectations data for the month of May
• Japan's housing starts and construction orders numbers for April
• Japan's monthly retail sales, unemployment rate, consumer confidence, and Tokyo core CPI data on May 29

Domestic Economic Data

Domestic economic data releases include:

• Fiscal deficit data for March-April on May 29
• Bank loan and deposit growth for fortnight ended May 15
• Foreign exchange reserves for week ended May 22

Corporate Earnings

The March quarter corporate earnings season will enter its final week, with more than 1,900 companies set to announce their quarterly results, including Nifty 50 names like Oil and Natural Gas Corporation and InterGlobe Aviation.

Indian Rupee

The rupee strengthened by 0.29 percent during the week to 95.68 a dollar due to recovery in the last two days after hitting an intraday all-time low of 96.96 a dollar. The strong rebound reflects profit booking in dollar longs after extreme weakness in the currency.

FII Flow

FIIs have net sold nearly Rs 7,600 crore worth shares in the cash segment in the recent week, taking their total outflow in the current month to over Rs 32,000 crore and nearly Rs 2.73 lakh crore in the current calendar year.

IPO Action

The mainboard segment will remain inactive for the third consecutive week starting from May 25, but the SME segment is expected to remain active with three new IPOs set to open for subscription next week.

Technical View

The Nifty 50 has been stuck in the 23,300-23,800 range and made several attempts to break the range on the higher side but failed every time on closing basis in the recent past sessions. The momentum indicators indicated weakening bearish sentiment, but overall trend is still negative as the index traded below key moving averages.

F&O Cues, India VIX

The maximum Call open interest was placed at the 24,000, followed by the 23,800 and 24,400 strikes, with the maximum Call writing at the 24,400, 23,950 and 24,450 strikes. On the Put side, the 23,000 strike holds the maximum Put open interest, followed by the 23,500 and 23,700 strikes, with the maximum Put writing at the 23,750, 23,500 and 23,800 strikes.

Corporate Action

Key corporate actions taking place next week include:

• Yaashvi Jewellers' Rs 44-crore IPO opening on May 25
• SMR Jewels' Rs 67-crore and Rajnandini Fashion India's Rs 18-crore public issues opening on May 26
• Bio Medica Laboratories, Autofurnish, and Q-Line Biotech closing their IPOs on May 25
• M R Maniveni Foods closing its IPO on May 26
• Harikanta Overseas closing its IPO on May 27
• NFP Sampoorna Foods making its market debut on May 25
• Teamtech Formwork Solutions making its market debut on May 26
• Vegorama Punjabi Angithi making its market debut on May 27