Dalal Street Week Ahead: 10 key topics include the ECB financial stability assessment, US and Indian inflation

Dalal Street Week Ahead: 10 key topics include the ECB financial stability assessment, US and Indian inflation

Because of the Lok Sabha elections and discussions about inflation in the US and India, it is anticipated that markets would consolidate over the week.

Due to significant FII (Foreign Institutional Investor) selling last week, the Nifty 50 and Sensex each saw losses of almost 3%. Because of the Lok Sabha elections and the discussion around US and Indian inflation, it is anticipated that the markets would consolidate throughout the next week.

With the India VIX reaching a 52-week high of 18.5 throughout the week, volatility remained high. "On Monday, May 13, the fourth round of the current Lok Sabha elections will take place, which might increase unpredictability. Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, said, "Overall, we anticipate the market to consolidate in a wider range and take cues from Q4 results, global factors, and news flows around the general elections."

Participants will be closely monitoring US inflation data on Wednesday.

The following are the main events to watch this week:

Business profits

Next week, more than two hundred firms will release their findings. Major ones include Andhra Cement, Mankind Pharma, Power Finance Corporation, RVNL, Titagrah Rail Vikas Nigam, Radico Khaitan, Bharti Airtel, PVR Inox, Zomato, Inox India, Varun Beverages, and Edelweiss Financial Services.

initial market activity

Go Digit General Insurance is one of the mainboard IPOs that will begin subscriptions on May 15 and end on May 17. On May 15, both Aadhar Housing Finance Limited and TBO Tek Limited will go public on the stock exchanges. On May 13, Indegene Limited is scheduled to list on the markets.

Rulka Electricals Limited, a SME, will begin accepting subscriptions on May 16 and end on May 21. Subscriptions for Quest Laboratories Limited will be accepted starting on May 15 and ending on May 17. The subscription period for Indian Emulsifier Limited will begin on May 13 and end on May 16.

raw petroleum

Less US crude stocks indicated a tighter oil supply, which is what drove Brent crude prices up to $82.79 per barrel. According to Mahavir Lunawat, Managing Director of Pantomath Capital Advisors Private Limited, "a more optimistic outlook for energy demand also played a part in expectations that the US Federal Reserve might cut interest rates later in the year, which further reinforced the increase in oil prices."

FII and DII information

In the cash group, FIIs sold stocks valued around Rs 82,800 crore last week, while DIIs sold stocks valued approximately Rs 52,152 crore. Conversely, FIIs and DIIs bought around Rs 61,264 crore and Rs 69,354 crore worth of stocks, respectively. Concerns over the results of the current general elections and significant FII selling have increased market pressure overall, according to Khemka.

The inflation rate

The consumer price index (CPI) figures that the National Statistical Office announced on May 13 will be watched closely by the street. India's CPI increased 4.9% annually in March. According to Vikram Kasat, Head of Advisory at Prabhudas Lilladher, "we believe the Reserve Bank of India (RBI) will be in a wait-and-watch phase until the inflation is in the targeted range of 4 percent, before discussing any rate cuts."

US inflation

Additionally, traders' focus will be on the US CPI figures for April, which are released on Wednesday. The Fed took a less-hawkish-than-expected posture at last week's meeting, with Chair Jerome Powell ruling out rate rises and implying that they are still leaning toward cuts.

worldwide cues

On Thursday, the financial stability review by the European Central Bank (ECB) will take place, coinciding with Japan's release of its Q1 24 GDP preliminary estimates.

technical perspective

Given the persistent sell-off in the preceding days and the development of the Inside Bar candlestick pattern on the daily charts, the Nifty 50 could continue to rise in the next session. This is in line with last Friday's recovery. However, analysts warned that unless the index sees a definitive close above 22,300 and persists above the same for a few days, the general trend is predicted to be in favor of bears in the next week given the large bearish candlestick pattern with lower high formation on the weekly timescale. The critical support is at 21,700, while the urgent support is at 21,900.

According to Rajesh Bhosale, a technical analyst at Angel One, "the low on Thursday that coincides with the 89 EMA at 21,900 serves as immediate support, followed by preceding swing lows in the 21,800 - 21,700 range."

He believes that the area between the 20 and 50 EMA, or around 22,200–22,300, poses a significant challenge on the upside. He recommended traders to keep a careful eye on these levels and modify their trading tactics as necessary.

F&O signals

According to options data, the Nifty 50 is likely to face significant resistance in the next week near levels of 22,500, with important support located around 21,500.

Regarding weekly options, the highest call writing was at 22,800 strike, followed by 22,500 and 22,900 strikes, while the highest call open interest was at 23,000 strike. On the put side, the most open interest was at the 21,000 strike, with the highest writing at that strike, followed by the 22,000 and 21500 strikes.

Since the volatility has been rising for the past 12 days, the bulls are now in an uncomfortable situation. The fear index, the India VIX, increased by 26% over the previous week and by more than 81% over the previous 12 days.

Business activity

The record date for Godrej Consumer Products' interim dividend of Rs. 10 is fixed for May 14. May 15 is the record date that Hindustan Zinc has set for its interim dividend of Rs 10. May 16 is the record date for the last dividend of Rs. 28 payable by Tata Consultancy Services. On May 15, Solara Active Pharma will conduct an equity share rights issuance.