Markets week ahead: Will Sensex, Nifty 50 continue their winning spree?

On Friday, Sensex closed at 59,307.15 up by 104.25 points or 0.18%, while Nifty 50 edged higher by 12.35 points or 0.07% to end at 17,576.30. Heavyweights like Axis Bank, ICICI Bank, HUL, and Kotak Bank were top performers due to their Q2 results.

In terms of sectoral indices, BSE Bankex surged by nearly 949 points, while Bank Nifty surged over 684 points on October 21.

Meanwhile, the rupee edged higher against the US dollar amidst firmness in domestic equities and a sustained surge in treasury yields coupled with RBI’s intervention. After cracking 83-mark, the rupee closed at 82.6750 per dollar on Friday. In the past six weeks, the domestic currency dropped by around 4% against the greenback.

On the other hand, after holding a bearish appetite for equities, FIIs turned into net buyers in the last two trading sessions of this week with October 20 witnessing the most buying. On October 21, FIIs pumped in ₹438.89 crore in the equities, while on October 20 — the investment was to the tune of ₹1,864.79 crore. From October 17-19, FIIs selling in the equities was around ₹979.34 crore.

From last week, Sensex rose by over 1,387 points or 2.4%, while Nifty 50 soared by nearly 391 points or 2.3% respectively in the week between October 17-21. Compared to last week, the BSE-listed firms’ market cap jumped more than ₹4.13 lakh crore in the week ending October 21, 2022, to nearly ₹274.42 lakh crore. The market cap was around ₹270.29 lakh crore by end of October 14 last week.

Vinod Nair, Head of Research at Geojit Financial Services said, “Despite global weaknesses, domestic sentiment was positive ahead of Diwali and the market showed its resilience, supported by a good start to the earnings season. The benchmark indices have been rising for the last six sessions, aided by stock-specific momentum in IT, banks, and FMCG. The rise in credit growth to a 10 year high of 17.94% YoY as of October added colour to the bank nifty with a gain of 3.8%, while PSU banks gained by 11% during the week.”

What to expect in markets week from October 24-28?

Trading in equities, derivatives, commodities and other securities will be shut on October 24 due to Lakshi Pujan (main Diwali) and on October 26 due to the Diwali Balipratipada celebration. Thereby, trading will be allowed only on October 25, 27, and 28. However, markets will open for an hour on October 24 from 6.15 pm to 7.15 pm as part of Muhurat trading.

According to Nair, some profit booking was also seen towards the end of the week as domestic investors maintained their cautious stance ahead of the truncated week. On the global front, a rise in UK inflation to a 40-year high of 10.1% in September added to fears of more aggressive monetary policy by the central bank. As there are no major triggers for the next week, the market direction will be based on global sentiment and the earnings season.

Further, Mitul Shah – Head of Research at Reliance Securities said, “The Indian rupee breached the 83 per dollar mark for the very first time, on growing demand of dollars from fuel companies and a widening current account deficit. A rising dollar and strengthening US bond yields only contributed to the weakness. The Indian rupee has fallen ~12% against the dollar so far this year. The market fear that more rate hikes by the US Fed could again harden US Treasury yields which could further weaken the rupee.”

Also, Shah said, “The 2QFY23 earning season so far witnessed healthy revenue growth but higher inflationary pressure took toll on profitability. So far 120/BSE500 companies’ revenue grew by 23% YoY, EBITDA increased by 15% YoY while PAT was largely flat on YoY basis.”

Shah added, “Inflation continues to remain sticky, both, in the domestic and the US economy. India’s growth remains strong and expected to be one of the fastest growing economies in the world, while global recession and downgrading of growth persisted for major economies. The market is looking at US Fed monetary policy meeting scheduled for 2nd November. Commentary on festive demand, inflation outlook and rate hike will be keenly watched in the near term.”

Some of the major Q2 earnings to watch in the week of October 24-28 are — Dabur, Tata Chemicals, Indus Tower, SBI Card, REC, and PNB Housing Finance among others.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.