Indian markets could recover on Monday but earnings, global cues will decide the rest of the week, say experts
May 6, 2024, 00:40 IST
After a choppy session last Friday, Indian stock markets are preparing for a robust performance in the upcoming week, say experts. As multiple factors such as earnings reports, promising FPI trends, GDP data in the euro zone, and global market trends, come into play this week investors are in for an exciting times ahead.
According to the market experts, the decline in markets on Friday was driven by speculations of increased taxation. It is anticipated that Monday will see a rebound as the Finance Ministry provided clarifications after market hours on Friday.
"Monday the market should show some recovery after Friday's fall on back of rumours of higher taxation. The clarification came post market hours from the Fin Min and hence some recoup of losses should happen this week," said Vivek Karwa, VRIDHI Investment.
Reacting to the reports that the government might planning to introduce changes in the capital gains tax structure if voted back in the Lok Sabha 2024 elections, Finance Minister Nirmala Sitharaman tweeted "Wonder where this is come from. Was not even double checked with @FinMinIndia. Pure speculation." on Friday evening.
Other market experts like Prashanth Tapse, Senior VP of Research at Mehta Equities Ltd, attributed Friday's fall to investor caution amidst uncertainties surrounding interest rates, geopolitical tensions, and foreign fund outflows.
"On Monday markets will react to the US employment data and Q4 results of companies like Dmart and Kotak Bank," Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said.
Global markets will carefully watch the continuous earnings outcomes and the GDP information from Europe, both of which are anticipated to influence market trends in India as well.
"Market will react according to the ongoing results season which a key detrimental factor for investors to align their portfolios. The market will also remain vigilant about the BoE policy and GDP data from the euro zone," said Vinod Nair, head of research, Geojit Financial Services. "We expect a degree of consolidation in the market due to expensive valuations and any election-led jitters," he said.
The previous week saw the BSE benchmark and NSE Nifty making modest gains, but Friday witnessed a sharp dip, with the BSE Sensex dropping by almost 1 percent while the NSE Nifty fell by 0.76 percent. Overall, last week, both BSE and NSE benchmarks remained more or less flat, with modest gains of around 0.2 per cent each.
"Domestically, the next batch of Q4 earnings reports will drive stock-specific movements, Hero MotoCorp, Larsen & Toubro, BPCL, State Bank of India, Eicher Motors and Tata Motors are some of the big names in the list and the next phase of voting," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
This trend is in line with the typical FPI pattern of late, characterized by brief periods of buying and selling due to dynamic geopolitical situation and changes in US bond yields. FPIs, who remained net buyers for the third month until till mid-April, cumulatively sold stocks worth Rs 8,671 crore by the end of the month, data showed.
The recent volatility of the Dow Jones Industrial Average, which is characterized by fluctuations and surpassing previous swing highs, introduces an element of uncertainty to market projections, causing analysts and investors to have differing opinions.
The Indian economy's robust performance, with GDP growth at 8.4 per cent in the October-December quarter of FY 2023-24, coupled with stable inflation levels and political stability, continues to attract FPI interest. Notably, December witnessed a significant inflow of Rs 66,135 crore, contributing to the overall positive trend seen throughout the year.
(With inputs from ANI and PTI)
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Can bulls make a comeback on Monday?
According to the market experts, the decline in markets on Friday was driven by speculations of increased taxation. It is anticipated that Monday will see a rebound as the Finance Ministry provided clarifications after market hours on Friday.
"Monday the market should show some recovery after Friday's fall on back of rumours of higher taxation. The clarification came post market hours from the Fin Min and hence some recoup of losses should happen this week," said Vivek Karwa, VRIDHI Investment.
Reacting to the reports that the government might planning to introduce changes in the capital gains tax structure if voted back in the Lok Sabha 2024 elections, Finance Minister Nirmala Sitharaman tweeted "Wonder where this is come from. Was not even double checked with @FinMinIndia. Pure speculation." on Friday evening.
Other market experts like Prashanth Tapse, Senior VP of Research at Mehta Equities Ltd, attributed Friday's fall to investor caution amidst uncertainties surrounding interest rates, geopolitical tensions, and foreign fund outflows.
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Earnings and global cues to influence
Global markets will carefully watch the continuous earnings outcomes and the GDP information from Europe, both of which are anticipated to influence market trends in India as well.
"Market will react according to the ongoing results season which a key detrimental factor for investors to align their portfolios. The market will also remain vigilant about the BoE policy and GDP data from the euro zone," said Vinod Nair, head of research, Geojit Financial Services. "We expect a degree of consolidation in the market due to expensive valuations and any election-led jitters," he said.
The previous week saw the BSE benchmark and NSE Nifty making modest gains, but Friday witnessed a sharp dip, with the BSE Sensex dropping by almost 1 percent while the NSE Nifty fell by 0.76 percent. Overall, last week, both BSE and NSE benchmarks remained more or less flat, with modest gains of around 0.2 per cent each.
"Domestically, the next batch of Q4 earnings reports will drive stock-specific movements, Hero MotoCorp, Larsen & Toubro, BPCL, State Bank of India, Eicher Motors and Tata Motors are some of the big names in the list and the next phase of voting," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.
FPI data shows promise
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Amidst these fluctuations, there are signs of optimism. Foreign portfolio investors (FPIs), after a brief period of selling in April, have returned as net buyers in May. As per the data from the National Securities Depository Limited (NSDL), FPI investments worth Rs 1,156 crore flowed in during the first three days of the month. This trend is in line with the typical FPI pattern of late, characterized by brief periods of buying and selling due to dynamic geopolitical situation and changes in US bond yields. FPIs, who remained net buyers for the third month until till mid-April, cumulatively sold stocks worth Rs 8,671 crore by the end of the month, data showed.
The recent volatility of the Dow Jones Industrial Average, which is characterized by fluctuations and surpassing previous swing highs, introduces an element of uncertainty to market projections, causing analysts and investors to have differing opinions.
The Indian economy's robust performance, with GDP growth at 8.4 per cent in the October-December quarter of FY 2023-24, coupled with stable inflation levels and political stability, continues to attract FPI interest. Notably, December witnessed a significant inflow of Rs 66,135 crore, contributing to the overall positive trend seen throughout the year.
(With inputs from ANI and PTI)
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