By Rahul shah
Equity benchmark indices, Sensex and Nifty, logged their biggest monthly advance since November last year, gaining 3.6 per cent and 4.1 per cent this April, respectively. Improved global investor sentiment and sustained inflows from foreign portfolio investors (FPI) lifted the markets this month. Nifty closed higher for the fifth straight day on Friday to end above the 18,000 mark. Sensex ended 1457 points higher (up 2.4%), well above the 61,100 mark against the previous week’s close and Nifty gained 441 points or 2.5% to close a 5-month high of above 18k at 18065. Market sentiment was buoyed by strong banking and financial sector earnings during the week. GST collection at all-time high and good Auto monthly numbers, On the other hand, will be the key driver for markets this week. Mid-cap tech and auto sectors announced strong quarterly numbers. With a nearly 4% rise in April, the Sensex has also logged its best month so far this year.
This week will be important not only in the domestic market but also in the global markets. The US Federal Reserve’s interest rate decision, quarterly earnings of corporates and domestic macroeconomic data will influence trading in the equity market in a holiday-shortened week ahead. Foreign funds’ trading activity, monthly automobile sales data, IMD statement on monsoon updates and global trends will also guide market movement this week. Moreover, ECB policy meetings are lined-up on Thursday along with PMI data from US, China and Eurozone area will be key factors in the market trend. All eyes are on the Federal Open Market Committee statement, which will be announced on May 3, while the ECB will announce its interest rate decision on May 4.
The expectation is that the US Fed may announce a quarter-point increase in the Fed’s benchmark rate to a range of 5% to 5.25%. However, US Fed commentary will be important for the sentiment. Hope of US Fed dovish commentary after the US GDP reported at 1.1% much below the expectation of 1.9%. Among the major quarterly results in the US to be announced last week, Advanced Micro Devices will be out late Tuesday and Apple is due on Thursday, along with major economic data in this week. A big question is whether Fed Chief Jerome Powell would signal that the central bank will pause rate hikes. In the previous week’s results fronts, heavyweights Microsoft Corp, Google-owner Alphabet Inc and Facebook-parent Meta Platforms Inc. all delivered upbeat results last week, sparking a bounce in the Nasdaq 100 Index and calming worries that a 20% rally in the gauge had gone too far.
Expects positive sentiment in the market due to a revival in FII buying interest, impressive corporate earnings, USDINR falling to a 1-month low, and falling crude oil prices to a 3-month low which will support market sentiment. Moreover, a positive factor is that the India Vix fell to a record low, indicating a comfortable zone. Indian markets are just over 4% lower than the record high. Any positive commentary by the US Fed chairman and good quarterly results announced by domestic corporates may be indexed to touch a record high.
Nifty Technical Levels
Nifty formed a Bullish candle on the daily frame on Friday with a long lower shadow indicating strong support-based buying and sustenance at higher zones. It has been making higher highs from the last five sessions and supports are gradually shifting higher. Now it has to hold above 18000 zones to witness an up move towards 18181 and 18300 zones while on the downside supports are placed at 17887 and 17777.
Cummins India: Buy – CMP: Rs 1575 – Target: Rs 1640 – SL: Rs 1555
Cummins India is giving a consolidation breakout on a daily scale. There is strong momentum across the capital goods space which will support the move. The momentum indicators are placed in the positive zone which will support the move to higher zones
IDFC First Bank: Buy – CMP: Rs 61.5 – Target: Rs 67 – SL: Rs 58
The stock has formed a strong base and surpassed the falling supply trend line, which is indicating strength. The momentum indicators are showing a bullish setup which will take the prices higher.
(Rahul shah Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. Views expressed are author’s own.)