Investors are bracing themselves for a week of potentially turbulent fluctuations in the stock market as various pivotal factors converge to shape market dynamics. With the new week commencing on October 30, market participants are keenly observing several critical elements that are set to influence the direction of financial markets. Let’s delve into these factors that will be instrumental in defining market movements in the days ahead.
1. Corporate Earnings Report
Once again, the second-quarter earnings of a multitude of companies will take center stage in determining market direction. In the forthcoming week, approximately 700 companies are slated to disclose their performance results. This list includes heavyweight corporations such as State Bank of India, Larsen & Toubro, Tata Motors, Bharti Airtel, Tata Steel, Sun Pharmaceutical, Hero MotoCorp, Titan, UPL, Tata Consumer Products, Adani Enterprises, and Britannia. Furthermore, significant players like GAIL India, Indian Oil Corporation, Ambuja Cements, TVS Motor, Interglobe Aviation, and many others will unveil their earnings for the September quarter.
2. Federal Reserve Meeting and Global Economic Data
Global markets will be closely monitoring the Federal Open Market Committee (FOMC) meeting of the Federal Reserve scheduled for November 1. During this event, all eyes will be on the statements made by Federal Reserve Chairman Jerome Powell. Analysts are anticipating that the fed funds rate will remain within the range of 5.25% to 5.50%. However, Powell’s remarks regarding the likelihood of a year-end rate hike and indications of a potential pause in future rate hikes will be of utmost importance.
Of particular note is the recent surge in US 10-year bond yields, reaching levels not seen in almost 16 years. Although they have retreated slightly to 4.84% from 4.93% over the past week, the markets remain on high alert. The US dollar index has also exhibited fluctuations, closing at 106.58, marking a rise from the previous level of 106.16.
Moreover, investors will pay close attention to policy meetings held by the Bank of Japan and the Bank of England on October 31 and November 2, respectively. Data to be closely scrutinized includes the US Unemployment Rate, Non-Farm Payrolls, Manufacturing, and Services PMI figures for October, as well as global indicators such as factory orders and Europe’s GDP growth rate estimates for the third quarter of 2023.
3. Israel-Hamas Conflict
The escalating conflict between Israel and Hamas has injected a significant degree of uncertainty into the global development outlook and has influenced volatility in oil prices. This protracted conflict will continue to be a prominent topic of global discussion in the coming week. The market has been driven by safe-haven demand, which resulted in COMEX gold prices surpassing the $2,000 per troy ounce mark last week.
Israeli Prime Minister Benjamin Netanyahu recently announced the commencement of the second phase of the conflict against Hamas. This phase involves heightened ground operations in Gaza with the aim of liberating hostages. At present, oil prices have remained within a stable range, staying below $95 per barrel, and have yet to be significantly impacted by the conflict. It is important to note that the support for oil prices has also been bolstered by robust US economic data.
4. Foreign Institutional Investment (FII) Flow
The substantial divestment by Foreign Institutional Investors (FIIs) witnessed in recent weeks has contributed to market declines. In the previous week, FIIs withdrew over Rs 13,000 crore from Indian equities. The total outflow from FIIs in October has nearly matched the figure for September, amounting to roughly Rs 26,600 crore. The driving forces behind this trend encompass rising US bond yields, uncertainty stemming from the Israel-Hamas conflict in West Asia, and mixed earnings reports for the September quarter. Analysts are of the opinion that the return of FIIs to the market is unlikely unless geopolitical tensions recede, US bond yields decrease, and market valuations become more appealing.
Notably, the financial services and information technology (IT) sectors have experienced substantial selling pressure from FIIs. In contrast, domestic institutional investors have managed to offset FII outflows to a significant extent by purchasing stocks worth Rs 11,550 crore during the past week and Rs 23,400 crore throughout the current month.
5. Automobile Sales
On the domestic front, market participants will also be keeping a watchful eye on the release of monthly automobile sales data for October, scheduled for November 1. Most experts anticipate that companies will continue to post favorable sales figures, buoyed by the ongoing festive season.
Factors such as new product launches, increased production levels, and robust economic growth have all contributed to the buoyant performance in the automobile sector. In September, passenger vehicle sales surged by 19% compared to the previous year, while two-wheeler sales recorded an impressive 22% growth.
6. Domestic Economic Indicators
The economic data on the domestic front is of paramount importance. On October 31, fiscal deficit and infrastructure output data for September will be made public. Additionally, S&P Global Manufacturing PMI data for October is due for release on November 1. Other data releases encompass S&P Global Services and Composite PMIs for October, bank loan and deposit growth for the 15-day period ending on October 20, and foreign exchange reserves for the week concluding on October 27, all slated for publication on November 3.
7. Initial Public Offerings (IPOs)
The week ahead will witness the launch of six Initial Public Offerings (IPOs). Notably, the IPO of Cello World, a consumer-ware company, is set to commence on October 30. This IPO aims to raise Rs 1,900 crore and will conclude on November 1, with a price band in the range of Rs 617-648 per share. Similarly, the IPO of Honasa Consumer, the parent company of Mamaearth, is scheduled to kick off on October 31, with the offering closing on November 2 and a price range of Rs 308-324 per share.
In the SME segment, Transteel Sitting Technologies will initiate an IPO valued at Rs 49.98 crore, spanning from October 30 to November 1, with a price band of Rs 67-70 per share. Additionally, Vrindavan Plantation will launch its IPO valued at Rs 15.29 crore, with each share priced at Rs 108. The IPO for Mish Designs, valued at Rs 9.76 crore, will be open from October 31 to November 2, with a price band of Rs 122 per share. Finally, the issue for SAR Televenture will open in the following month, from November 1 to November 3, with a price band set at Rs 52-55 per share, as the company seeks to raise Rs 24.75 crore.
Furthermore, IPOs such as Paragon Fine and Specialty Chemicals, which opened last week, will close on October 30. Meanwhile, the IPOs of Shanthala FMCG Products, KK Shah Hospitals, and Maitreya Medicare are all scheduled to conclude on October 31 and November 1, respectively.
Market Performance in the Previous Week
The stock market experienced mixed movements in the previous trading week. On the final trading day, Friday, October 27, the Sensex recorded a gain of 634 points, closing at 63,782, while the Nifty advanced by 190 points, concluding at 19,047. However, over the entire trading week, the Sensex reported a decline of 2.51%, with the Nifty following suit with a decrease of 2.71%.
As the new week unfolds, investors and analysts are carefully observing these critical factors, poised to anticipate market trends and make informed decisions in the weeks ahead.