Sensex, Nifty: Factors that may influence market next week and key results to watch out for

The coming week is going to be crucial for the stock market as it will be heavily loaded with macroeconomic data and announcements of quarterly results by some major companies. On the economic front, market participants will closely watch the deposit growth and bank loan growth data which are scheduled to be released on October 21.

The value of deposits in India increased 9.5% year-on-year in the fortnight ending September 9. The value of loans in India increased by 16.40% year-on-year in the two weeks to September 2022. On the same day, foreign exchange reserve data will also be out. India's forex reserves declined to $532.66 billion on September 30 from $545.65 billion in the previous week.  Investors will also keep an eye on some important quarterly numbers to be released next week. Among the companies that will put out their quarterly results next week are ACC and PVR on October 17; Nestle India, UltraTech Cement, and Indusind Bank on October 19; Asian Paints, Bajaj Finance, Tata Consumer Products, Axis Bank, and ITC on October 20; Bajaj Finserv, HDFC Life Insurance Company, JSW Steel, Hindustan Unilever, and SBI Life on October 21. ICICI Bank and Kotak Mahindra Bank will announce their quarterly numbers on October 22.

Market watcher Naveen Kulkarni, Chief Investment Officer at Axis Securities, said: “The Indian markets are following their global counterparts, which were significantly driven by short covering and also helped by market noise about lower terminal rate expectations from ECB and noise about the UK reversing the planned tax cuts. We expect short-term market volatility to continue, and thus, we advise investors to stick to investing in good quality companies available at a reasonable price.”

On the global front, traders will be focusing on key economic data from the United States (US), starting with the Monthly Budget Statement on October 17, followed by Redbook, Industrial Production, and NAHB Housing Market Index on October 18, Housing Starts on October 19, Philadelphia Fed Manufacturing Index, Initial Jobless Claims, Existing Home Sales on October 20 and finally Baker Hughes Oil Rig Count on October 21.

Market veteran S Hariharan, Head of Institutional Equity Sales at Emkay Global Financial Services, said: “FII flows into India have turned negative for the last few sessions, after a positive start in Oct. As a result, despite expectations of a strong earnings season, the broader market has been moving sideways, with DII inflows offsetting FII selling. Fears of potential earnings downgrades for IT stocks have not materialized thus far, while Banks are expected to report strong earnings in the coming weeks.”

“It is expected that the current bout of macro volatility to continue to cap any meaningful upsides in the indices, strong fundamentals notwithstanding. Consumer staples and discretionary names have been seeing some pressure on account of concerns related to margins going forward with commodity prices picking up again," he added.

Investment expert Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said “FPIs continued to sell in October. As per NSDL data, FPIs have sold equity worth Rs 7,457 crore till 15th October, taking their net equity selling to Rs 1,76,246 crore so far in CY 2022. An important trend in FPI selling is that whenever they sell continuously the selling is large in financials and IT which form the largest chunk of FPI holding.”

“This trend is evident now also. FPIs have been selling in oil and gas and metals too since these segments too will be impacted by a global economic slowdown. The major trigger for FPI selling is the sustained rise in the dollar and expectations that the dollar will continue to remain strong in the current global macro construct. A reversal in FPI selling will happen when the dollar shows indications of peaking and reversing."