On Friday, the Nifty 50 closed 0.42% higher at 24,854 points after hitting a two-month low earlier in the session, while the S&P BSE Sensex gained 0.27% to reach 81,224.
“The Nifty rebounded sharply after forming a panic bottom around 24,570 but failed to sustain below 24,700. On the hourly chart, a positive divergence is visible on the RSI (14), indicating a shift toward positive price momentum. Immediate resistance is at 24,900, which previously acted as support. A move above this level could trigger a short-term rally. The trend is likely to remain strong as long as the Nifty stays above 24,750,” said Rupak De of LKP Securities.
Key factors to track this week:
1) FII Flow
Foreign institutional investors (FIIs) continued to sell shares, offloading Rs 21,823 crore in the cash segment. Meanwhile, domestic institutional investors (DIIs) maintained buying momentum, purchasing Rs 16,384 crore.According to stock exchange data, foreign portfolio investors (FPIs) sold shares worth over Rs 77,701 crore in the secondary market in October 2024, marking the highest monthly outflow ever recorded from the Indian stock market.
“This massive selling caused a correction of about 5% in Nifty, but didn’t have a serious impact on the market since almost the entire FPI selling has been absorbed by DIIs, who are receiving sustained fund inflows. This trend of FII selling and DII buying is likely to sustain in the near-term,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
“The rationale behind FPI selling is the elevated valuations in India and the cheap valuations of Chinese stocks, which the FPIs have been buying aggressively since mid September. This “sell India, Buy China” is most likely to be a short-term tactical trade; but it can run for some more time, given India’s elevated valuations,” Vijayakumar added.
2) IPO Activity and Listings
This week, four mainboard IPOs are set to open for subscription: Godavari Biorefineries, Waaree Energies, Deepak Builders & Engineers, and Afcons Infrastructure.
In the SME segment, five new issues will launch starting Monday. Among the listings, Hyundai Motor India shares will debut on the main exchange, and two SMEs will list on BSE SME or NSE SME.
3) Q2 Results
Investors will closely watch corporate earnings as the next batch of Q2FY25 results is released. HDFC Bank, Kotak Mahindra Bank, and Tech Mahindra, which reported earnings over the weekend, will be in focus on Monday.
Additionally, Nifty 50 heavyweights like UltraTech Cement, Bajaj Finance, Bajaj Finserv, HUL, SBI Life, ITC, Bharat Electronics, BPCL, Coal India, JSW Steel, Shriram Finance, and ICICI Bank are set to announce their earnings. Analysts expect mixed results, with some sectors showing strength while others face challenges.
4) Crude Oil
Oil futures fell sharply last week, with Brent crude dropping 7% and U.S. West Texas Intermediate (WTI) losing 8%. This marked the steepest weekly declines since early September when OPEC and the International Energy Agency lowered their global oil demand forecasts for 2024 and 2025.
Brent crude futures settled at $73.06 per barrel on Friday, down 1.87%, while WTI closed at $69.22 per barrel, down 2.05%.
5) Technical View
A reasonable positive candle was formed on the daily chart with a minor lower shadow. Technically, this pattern is indicating a short-term reversal in the market on the upside post-downward correction. The chart pattern of Friday signals the formation of a bullish piercing line-type pattern.
Friday’s sustainable upmove from the lows could be a cheering factor for the Bulls to make a comeback. Follow-through upmove from here is expected to confirm a crucial bottom reversal pattern. Immediate support is at 24,500 and the next overhead resistance is placed around 24,950-25,000 levels, said Nagaraj Shetti of HDFC Securities.
6) China’s Economic Data
China’s economy grew at an annual rate of 4.6% in the third quarter, slightly above expectations but marking the slowest growth since early 2023. Data also showed that Chinese retail sales and industrial output rose more than anticipated in September.
China’s stronger-than-expected economic data could have positive implications for India’s metals and commodities sectors, as increased demand from China may boost exports of raw materials like iron ore and steel. However, FIIs may continue to shift funds to China in search of better returns.
7) Global Markets
Global stock markets displayed mixed trends on Friday. Investors reacted to stronger-than-expected Chinese economic data, a eurozone interest rate cut, and strong U.S. corporate earnings.
In New York, all three major Wall Street indices posted gains, with solid earnings reports driving the Dow and S&P 500 to record highs. This marked the sixth consecutive week of gains for these indices.
Meanwhile, Hong Kong and Shanghai saw upward movement amid hopes that the Chinese government may introduce measures to revive its struggling economy, with tech stocks and developers leading the way.
Analysts noted that despite positive momentum in U.S. markets, Indian markets remained largely unaffected, likely due to persistent foreign fund outflows. This divergence is expected to continue, with fund flow patterns remaining under close scrutiny.
8) Corporate Action
Shares of major companies like HCL Technologies, LTIMindtree, and L&T Technology Services will trade ex-dividend this week. Additionally, some stocks will trade ex-bonus and ex-rights.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times.)