DALAL STREET WEEK AHEAD: INDIA & US INFLATION, Q3 EARNINGS, POWELL TESTIMONY AMONG 10 KEY FACTORS TO WATCH
The market extended its upward journey for the second consecutive week, with the Nifty 50 rising 0.33 percent amid volatility in the week that ended on February 7.
The sentiment in the market was positive with the easing of global trade concerns after US President Donald Trump announced a temporary pause in tariffs for Mexico and Canada. But the street turned cautious later in the week ahead of the Reserve Bank of India's (RBI's) monetary policy committee (MPC) meeting. The central bank announced a 25 basis point (bps) cut in the repo rate, but kept the policy stance `neutral' (against expectations of an accommodative stance). Also, the lack of further measures for liquidity infusion disappointed the street. FII outflow and Rupee depreciation also weighed on the sentiment, while falling oil prices played a supportive role.
On Monday, the market might react to the Delhi polls results announced on Saturday, where BJP emerged victorious. Overall, the coming week (starting February 10) is expected to be rangebound with focus on macroeconomic data (including CPI inflation), US inflation, Federal Reserve Chair Jerome Powell's testimony, the last lot of Q3 results, and further developments on US tariffs, experts said.
The Nifty 50 rose 78 points to 23,560 and the BSE Sensex climbed 354 points (0.46 percent) to 77,860, while the Nifty Midcap and Smallcap 100 indices gained 0.2 percent each.
"The upcoming week is set to be dynamic for global and Indian markets, driven by key macroeconomic data releases and corporate earnings. Market sentiment will be shaped by inflation figures, industrial output data, and major earnings announcements," said Puneet Singhania, Director at Master Trust Group, a brokerage.
Ajit Mishra, SVP, Research, at Religare Broking advised investors to focus on stock selection based on sectoral trends. "Most key sectors, except FMCG, are showing rotational participation. However, caution is advised in the midcap and smallcap segments, as broader market volatility remains a concern," he said.
Here are 10 key factors to watch for next week:
The December quarter earnings season will end in the coming week when more than 2,000 companies will release their results, including Nifty 50 firms like Eicher Motors, Hindalco Industries, Apollo Hospitals, and Grasim Industries.
Other key names like Lupin, Siemens, FSN E-Commerce Ventures Nykaa, Honasa Consumer, Ipca Laboratories, National Aluminium Company, Bata India, Engineers India, Escorts Kubota, Patanjali Foods, Varun Beverages, Vodafone Idea, Astrazeneca Pharma, Berger Paints, IRCTC, NBCC, Ashok Leyland, Bharat Forge, Power Finance Corporation, Jubilant FoodWorks, Crompton Greaves Consumer Electricals, Hindustan Aeronautics, Muthoot Finance, Afcons Infrastructure, Manappuram Finance, United Breweries, Glenmark Pharmaceuticals, Aditya Birla Fashion and Retail, Dilip Buildcon, Dr Agarwals Eye Hospital, and Narayana Hrudayalaya will also announce their quarterly earnings next week.
CPI inflation
Apart from earnings, market participants will also keep an eye on the CPI inflation numbers for January, which are to be released on February 12. CPI inflation, one of the most important factors for RBI to consider before taking any interest rate decision, is expected to decline further to sub-5 percent in January 2025, against 5.22 percent in December 2024. In fact, it has been declining since crossing 6.21 percent (above the upper threshold of RBI's long term range of 4 +/-2 percent) in October 2024.
On the same day, the industrial and manufacturing production numbers for December will also be announced. On February 14, the WPI inflation for January, the bank loan and deposit growth figures for the fortnight ended January 31, and foreign exchange reserves for the week ended February 7, will be released.
US inflation
On the global front, all eyes will be on the US inflation, the PPI, and the retail sales and industrial production data for January. Most economists expect the January inflation rate to hold steady at 2.9 percent, unchanged from December 2024.
Fed Chair Powell's testimony
The testimony is another factor that will be closely watched globally. For the first time since July 2024, Fed Chair Powell will appear before lawmakers next week and report on the economic outlook and recent monetary policy actions, followed by questions from lawmakers. Powell will testify before the Senate Banking Committee on February 11 and the House Financial Services Panel (finance committee) on February 12.
Since his July testimony, the central bank has slashed interest rates by 100 bps in the last three meetings of 2024. In the January 2025 policy meeting, he had said that the central bank was in no hurry to lower interest rates further and kept it unchanged in the 4.25-4.5 percent range (per expectations), and added that he wanted to see further progress on inflation.
Global economic data
Apart from US inflation and the Fed Chair's testimony, Q42024 GDP estimates of Europe and UK, and the January vehicle sales figures of China will also be watched.
Oil prices
Oil prices, which turned favourable for importers like India, will also be watched. Brent crude futures, the international benchmark for oil prices, fell for the third consecutive week after spiking to over $80 a barrel last month. It closed last week at $74.66 a barrel, down 1.33 percent from the previous week. In fact, the prices dropped below all key moving averages, signalling bearish sentiment, which is positive for India.
This was primarily driven by Trump’s renewed commitment to increasing US oil production in an effort to reduce prices and combat inflation, along with a sharp increase in US oil stocks. Concerns that the potential US-China trade war could dampen crude demand also weighed on prices. According to Kaynat Chainwala of Kotak Securities, the markets are closely monitoring the first batch of US sanctions against Iran under the Trump 2.0 administration, which have targeted an international network allegedly facilitating the shipment of Iranian oil to China.
The actions of foreign and domestic institutional investors will also be watched. Thus far in February, FIIs have been net sellers to the tune of more than Rs 10,000 crore on top of the Rs 87,375 crore's worth sold in January. Among other reasons, this has been due to a strong dollar and healthy US bond yields.
However, DIIs managed to compensate for the FII outflow to a major extent, with net buying of Rs 7,274 crore worth of shares in the cash segment against Rs 86,592 crore worth of net purchases in January (provisional numbers). FIIs remained net sellers for the fifth consecutive month, while DIIs have been net buyers since August 2023.
The US Dollar index, which measures the value of the USD against a basket of six leading currencies, closed at 108.096 last week amid volatility, down 0.37 percent. It remained rangebound for the third consecutive week, with support at the 107 level. The US 10-year Treasury yield fell 1.1 percent to 4.493 percent, continuing its downtrend for the fourth consecutive week.
Further moves in the Indian Rupee will also be watched as the currency weakened sharply by 1.25 percent to 87.59, the lowest closing level against the dollar. This was the biggest weekly drop in several years. The rupee hit the lowest level of 87.63 intra-week.
The primary market will see significant activity with nine IPOs hitting Dalal Street next week, including three from the mainboard segment. Ajax Engineering's Rs 1,269-crore public issue will open for subscription on February 10, followed by Hexaware Technologies' Rs 8,750 crore initial share sale on February 12, and Quality Power Electrical Equipments' issue on February 14.
In the SME segment, Chandan Healthcare, PS Raj Steels, Voler Car, Maxvolt Energy Industries, LK Mehta Polymers, and Shanmuga Hospital will launch their public issues next week, while Solarium Green Energy, Readymix Construction Machinery, and Eleganz Interiors will close their IPOs early in the coming week
All the listings scheduled for next week are from the SME segment, with Chamunda Electricals being the first, followed by Ken Enterprises, Amwill Healthcare, Solarium Green Energy, Readymix Construction Machinery, and Eleganz Interiors.
Technical view and F&O cues
The Nifty is expected to consolidate in the coming week as long as it trades below 23,800 — the crucial hurdle for an upward rally towards the 24,000-24,200 zone. It's support lies at 23,400 (50-week EMA), followed by 23,250 (the low of last week).
Overall, the sentiment turned positive with the formation of a bullish candlestick pattern with an upper shadow on the weekly charts (indicating some pressure at higher levels). This was after a bullish engulfing pattern in the previous week with higher highs and higher lows, and above-average volumes. Decisively breaking 23,250 on the downside will inhibit the higher top-higher bottom formation, experts said.
Meanwhile, weekly options data indicated that the Nifty is expected to see a trading range of 23,000-24,000 next week. On the Call side, the maximum Call open interest was seen at 24,000 strike, followed by 24,500 and 23,800 strikes, with the maximum Call writing at 24,000 strike, followed by 23,800 and 24,500 strikes. On the Put front, the 22,600 strike holds the maximum open interest, followed by the 23,000 and 23,200 strikes, with the maximum Put writing at the 23,200 strike, followed by the 22,800 and 22,700 strikes.
The volatility index, India VIX, or the fear gauge, was quite supportive for bulls, falling 2.91 percent during the week to 13.69, after a 15.83 percent decline in the previous week. It dropped below all key moving averages and stayed in the lower zone.
Corporate action
Here are key corporate actions taking place in the coming week:
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2025-02-09T12:00:35Z