Oil Market Volatility, Earnings Season, and Global Economic Outlook: Key Events to Watch This Week

Market Retreats with 2% Loss Amid Global Headwinds

The Indian market retreated with a loss of around 2 percent in the week ended April 24, snapping two consecutive weeks of gains. The market's decline came amidst a significant recovery of over 10 percent from the April 2 low, as global and domestic headwinds weighed on equities. Tensions in West Asia, soaring oil prices above the $100-a-barrel level, stalled US–Iran talks, a weakening rupee, persistent FII outflows, and signs of an economic slowdown flagged by the RBI and foreign brokerages' downgrade of the Indian equity outlook contributed to the market's decline.

Key Events to Watch in the Coming Week

The market is expected to remain volatile and consolidative in the coming truncated week starting April 27, with a slew of events including central bank meetings (FOMC, BoE, ECB, and BoJ), US GDP numbers, and another set of March quarter earnings. The ongoing crisis in the Strait of Hormuz and its impact on oil prices, along with rupee movement and FII sentiment, will also be closely watched. Volatility related to the monthly F&O expiry is also likely to be seen.

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Market Performance

The Nifty 50 plunged 456 points (1.84 percent) during the week to 23,898, while the BSE Sensex dropped 1,829 points (2.33 percent) to 76,664. However, broader markets outperformed the benchmark indices, with the Nifty Midcap 100 index falling 0.87 percent and the Smallcap 100 index rising 0.01 percent. IT stocks were the biggest laggards, with the Nifty IT index shedding over 10 percent during the week, impacted by weak earnings and cautious management guidance.

Key Factors to Watch

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

1. Strait of Hormuz, Oil Prices: The prevailing uncertainty surrounding the Strait of Hormuz, the waterway in the Persian Gulf through which nearly 20 percent of global oil supply transits, is expected to keep volatility in crude oil prices elevated.
2. Fed Interest Rate Decision: The US Federal Reserve is widely expected to hold rates unchanged in the 3.50-3.75 percent range for third straight meeting next week due to inflation concerns and economic growth uncertainty amid Middle East developments.
3. Global Economic Data: The advance estimates for US GDP, Core PCE prices, and real consumer spending numbers for the first quarter of the current year will also be watched.
4. Q4 Corporate Earnings: The March quarter earnings season will be in full swing next week as more than 150 companies will release their results scorecard.
5. Indian Rupee: The focus will also be on the rupee, which depreciated throughout the recent week by 1.78 percent in the recent week - the biggest weekly decline since September 2022 - to settle at 94.22 against the US dollar.

IPO Action

The primary market action is expected to be muted for another week as only one initial public offering (IPO) - Amba Auto Sales & Services offer worth Rs 65 crore - is set to hit Dalal Street next week on April 27 with a price band of Rs 130-135 per share.

Technical View

The Nifty 50 is controlled by bearish sentiment at least in the short term given the negative crossover in RSI and consistently fading green bar of MACD histogram. For trend reversal, the index needs to reclaim and sustain above 24,200 (50-day EMA) for a move back toward the recent week's high of 24,600, until then the consolidation may be seen with immediate support of 23,700 followed by 23,500 as a crucial support.

India VIX

The fear index, India VIX rebounded sharply by nearly 15 percent in the recent week to near 20 level, coming back above short term moving averages, which signaled a concern for bulls. If it gets back and sustain above 20 level, the bulls may be at risk.