Indian Stock Market: Key Developments Over the Weekend That Will Influence Monday’s Trade

by | Nov 20, 2024 | 0 comments

An Indian stock market cautious start this week seems to be in store as a result of several factors materializing locally and internationally. Gift Nifty promises a weak opening; mixed global markets further add to the nervousness of investors. In today’s calendar, key triggers like geopolitical tensions, domestic elections, and macroeconomic indicators are in play. Here’s the 10 major factors that will shape the show of the Indian stock market on Monday.

1. Indian Stock Market Nifty Suggests a Weak Opening

Gift Nifty Suggests a Weak Opening Gift Nifty, that’s trading around the 23,495 mark—a105-point discount from the Nifty futures’ previous close—is an indicator of a weak opening for Indian indices. Along with lukewarm global cues, the investor is ready to face a tough session.

2. Domestic Market Quick View

Indian equity benchmark indices, Sensex and Nifty 50, ended the previous week on a negative note as they extended losses for the sixth straight session on Thursday due to Guru Nanak Jayanti holiday on Friday.

Sensex: Down by 110.64 points or 0.14% at closing levels at 77,580.31.
Nifty 50: Down by 26.35 points or 0.11% at closing hours at 23,532.70.
The sentiment of the market has been weighed down by poor earnings from India Inc and by the global desire for safe-haven assets such as the US dollar and yields on Treasury. Forecasters are expecting Nifty to trade in the range of 23,338-24,099 this week, and on course for a rebound.

3. Global Market Sentiments

a. Asian Markets

Asian indices opened weaker, reflecting investor caution ahead of critical economic data, including China’s loan prime rate and Japan’s inflation numbers.

Nikkei 225: Declined 1.16%.
Topix: Down 0.65%.
Kospi: Rose 1.06%.
Kosdaq: Down 0.62%.
Hang Seng Futures: Suggest a more bullish opening.

b. Performances on Wall Street

US markets closed out the previous week with heavy losses after fears over a less aggressive withdrawal by the Federal Reserve to slash interest rates mounted.
Dow Jones: Down 305.87 points (0.70%) at 43,444.99.
S&P 500: Down 78.55 points (1.32%) to 5,870.62.
Nasdaq Composite: Down 427.53 points (2.24%) at 18,680.12.
At the end of every week, the S&P 500 dropped 2.08%, Nasdaq fell 3.15%, and Dow declined 1.24%.

c. Big Losers

Applied Materials, -9.2%
Moderna, -7.3%
Pfizer, -4.7%
Monster Beverage, -7%
Lamb Weston, -6%
Keurig Dr Pepper, -5%

4. Fed Chairman Jerome Powell’s Remarks.

US Federal Reserve Chair Jerome Powell signaled that the central bank has no intention to rush to cut interest rates. While the US is inching closer to a 2% target for inflation, Powell acknowledged that care was necessary in view of the broad growth in the economy and strength of the job market. This would mean tighter Fed policy for longer and could affect global financial flows and sentiment.

5. US Retail Sales Beats Forecasts

U.S. retail sales were up 0.4% in October, better than the estimated 0.3% gain. That follows an upwardly revised 0.8% gain in September. The strong retail sales data tend to suggest that consumer spending is still in good health, and therefore the Fed may not aggressively cut rates.

6. CLSA Increases India Allocation

Global brokerage CLSA has increased its India allocation to 20%, citing India’s resilience against external shocks such as trade tensions. CLSA finds India to be a relative oasis of stability given domestic demand and stable energy prices. The move signals growing foreign investor confidence in Indian markets, which had recently faced headwinds.

7. Japan’s Machinery Orders Disappoint

Japan’s core machinery orders unexpectedly decreased by 0.7% in September, still lower than the estimated 1.9% growth. It is the second consecutive month that core orders have declined, which reflects weak corporate sentiment over investment. On a yearly basis, orders fell by 4.8%, which indicates more wrinkles in Japan’s economy.

8. Oil Prices Under Pressure

Crude oil prices dipped once again, this time on worries over weak demand from China and the increasing supply factor.

Brent Crude: Dropped 0.13% to $70.95 a barrel.
West Texas Intermediate (WTI): Declined 0.31% to $66.81 a barrel.
Lower oil prices may give breathing space to India, an oil importer which could lead to lower inflationary pressure and increased corporate margins.

9. US Dollar Gaining Traction

The greenback continued to benefit as it was buoyed by higher Treasury yields and expectations of restrained rate cuts.
Dollar Index: Remained flat at 106.730 near the one-year peak of 107.07.
Weekly Performance: Gained 1.6%, marking six gains in the last seven weeks.
The dollar’s strength poses challenges for emerging markets, including India, by increasing the cost of dollar-denominated imports and raising external debt servicing costs.

10. Corporate Action: Samsung’s Share Buyback

Samsung Electronics announced a massive share buyback plan worth 10 trillion won ($7.2 billion) over the next year, boosting investor sentiment.

Trading Price Reaction: The shares of Samsung rallied 6.7% on Monday, after rallying 7.2% on Friday.
This corporate action gives an indication that increasing trend among global companies to enhance shareholder value by means of buybacks is an inspiration for Indian corporates

Domestic Catalysts

1. Maharashtra Assembly Elections

This state elections would attract greater market sentiment impact through sectors such as infrastructure and real estate are sensitive to policy changes.

2. Foreign Fund Flows

One should closely monitor the net inflow/outflow by FII as FIIs largely influence market liquidity and sentiment.

3. Macro Data

Domestic macro numbers inflation, industrial production, and gdp growth n& m -once again will be the direction of the market

Technical Outlook for Nifty

Deepak Jasani, Head of Retail Research at HDFC Securities, still sees Nifty trading in the range of 23,338-24,099 for this week. A further bounce back seems possible as conditions are oversold and have been consolidated on recent charts.

Conclusion

A tough week ahead for the Indian market seems to be in store, with weak cues from the world outside, volatile oil prices, and a strong dollar. However, should promise some relief in the form of improved foreign fund inflows and CLSA upping its India allocation.

Investors must be prudent and keep constant observation over developments in the worldwide market, macro indicators, and sector-specific triggers. Dovetailing the apprehensions looming large, a well-diversified portfolio with quality stocks shall be the key to navigating the market’s highs and lows.

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