Nervous Dalal Street, Three Nifty Earnings And Key Inflation Data: The Week Ahead

Indian markets witnessed a turbulent week aided by a mega-selloff by foreign investors. Nervousness in the equity markets was due to a confluence of disappointing fourth-quarter results, voter turnout in ongoing Lok Sabha elections and heightened volatility, according to market analysts.

Going ahead, the country's key inflation print, phase four of the general elections, and fourth-quarter earnings of the remaining Nifty companies will be the key deciding factors for the markets for the week.

The volatility index is expected to remain elevated in the near term due to ongoing union elections and foreign investor sell-offs, which have impacted market sentiment, according to Shrey Jain, founder and chief executive officer, SAS Online. "It's advisable to maintain lighter positions and reduce exposure to mid and small cap companies."

Technically, on daily and weekly charts it has formed a double top formation, which indicates the upward trend has slowed down, according to Amol Athawale, vice president-technical research, Kotak Securities. In addition, on weekly charts it has formed a long bearish candle, which is largely negative, he said.  

India's benchmark equity indices logged their worst week in nearly two months as they declined around 2% during the last five sessions. On Friday, the indices ended higher after five sessions, led by gains in Bharat Petroleum Corp. and Hero MotoCorp Ltd.

On a weekly basis, the Nifty lost 1.87% and the Sensex declined 1.64%, marking the worst close since the week ended March 15. The BSE Midcap and Smallcap indices experienced sharper drops of 3% and 4%, respectively.

On Friday, the Nifty ended 0.44%, or 97.10 points, higher at 22,054.60 and the Sensex rose 248.45 points, or 0.34%, to close at 72,652.62.

Meanwhile, foreign portfolio investors pulled out over Rs 21,600 crore in the last five trading sessions. But, domestic investors remained bullish despite heightened volatility and mopped up Rs 17,300 crore last week, according to the provisional data from the National Stock Exchange.

Volatility gauge, India VIX, rose 11.2% during the week to hit a 52-week high on Thursday.

Nifty May futures were up by 1.43% to 22,140 at a premium of 84.8 points, with its open interest down by 3.7%. Nifty Bank May futures were down by 1.05% to at a premium of 186.15 points, while its open interest was down by 1.02%.

Open interest distribution for the Nifty May 16 series indicates that the 21,000 level is seeing the most put strikes, and call strikes of 23,000 have the maximum open interest.

For the Bank Nifty options' May 15 expiry, the maximum call open interest was at 48,000 and the maximum put open interest was at 45,000.

Both the call and put writers battled out at the 22,000 strike in Nifty and the put writers managed to hold on to this level at the close of Friday's session, Ashwin Ramani, derivatives and technical Analyst, SAMCO Securities, noted.

The 22,000 level is likely to act as a make-or-break level for the Nifty, Ramani said. "If put writers (Bulls) exit from the 22,000 Strike, the Nifty is likely to extend its fall further."

Consumer price inflation, wholesale prices, and trade data that will be published on May 13 will be big cues to watch out for on the domestic front.

Meanwhile, voting for 96 parliamentary constituencies in Phase 4 of the General Election will also be held on May 13. The state elections for Andhra Pradesh and Phase 1 of the Odisha state election will also happen on the same day.

MSCI is scheduled to announce changes to global standard indices as part of its quarterly review on May 14.

During the week, airlines regulator, the Directorate General of Civil Aviation will report the domestic air passenger traffic for April.

US Consumer Price Inflation, Japan's quarterly GDP estimates and the UK's monthly unemployment figures will be the big global events that could shape up the markets during the week.

Virat Kohli-backed Go Digit General Insurance will be the only company that will be launching its initial public offering during the week in the mainboard segment.

The company has set a price band of Rs 258–272 per share for its initial public offering that is set to open on May 15. The IPO consists of a fresh issue of equity shares aggregating up to Rs 1,125 crore. The offer-for-sale portion will consist of up to 5.47 crore equity shares with a face value of Rs 10 each.

In the SME space, Quest Laboratories Ltd., Indian Emulsifier Ltd., Mandeep Auto Industries Ltd., and Veritaas Advertising Ltd. will open their public offer during the week.

The markets will also see the listing of the shares of Indegene Ltd. on the stock exchanges. The company's shares will debut on Monday and the IPO was subscribed 69.91 times on its final day.

Bharti Airtel Ltd., Mahindra & Mahindra Ltd. and JSW Steel Ltd. will be Nifty 50 companies that will be reporting their earnings for the quarter during the week.

Godrej Consumer Products Ltd., Tata Consultancy Services Ltd., Coforge Ltd., and Hindustan Zinc Ltd. will the among major companies with record dates for their interim/final dividend in the coming week.

Meanwhile, shares of Canara Bank Ltd., and Vardhman Polytex Ltd. will undergo a stock split this week.

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