Sensex, Nifty this week: From India's IIP data to US trade balance, factors that may drive Dalal Street

Last week, Indian equity markets ended with decent gains, supported by the U.S. Federal Reserve’s rate pause which encouraged investors across the globe. This week, investors will be eyeing key events such as the Index of Industrial Production (IIP), FII investments, major quarterly earnings, and the Balance of Trade data in the US that will keep the markets buzzing.  

Economic data: On the economic front, investors would be eyeing the IIP data which is scheduled to be released on November 10. Industrial production in India climbed 10.3 per cent year-on-year in August 2023, the highest since June last year, from a 5.7 per cent rise in the previous month and above market expectations of 9 per cent.  

Quarterly Results: In the coming week, major PSU stocks such as Hindustan Petroleum Corporation, BHEL, Oil India, NHPC, BEML, NBCC, SJVN, Coal India, ONGC, SAIL, IRCTC, and Power Grid Corporation will report their Q2 earnings. 

Besides, traders will also be eyeing the other important result announcements this week starting with Bajaj Electricals, Bharat Forge, Divi's Laboratories, Emami, Apollo Tyres, CRISIL, Cummins India, Zydus Lifesciences, Bata India, Godrej Industries, Lupin, Nazara Technologies, Pidilite Industries, Tata Power, NCC, Apollo Hospitals Enterprise, Ashok Leyland, Torrent Power, Biocon, IPCA Laboratories, Mahindra and Mahindra, Tata Chemicals, etc. 

US market data: On the global front, investors would be looking for important economic data from the US, starting with Balance of Trade, Redbook on November 7, followed by Initial Jobless Claims on November 9, Michigan Consumer Sentiment, Baker Hughes Oil Rig Count on November 10.  

Foreign Investments: Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, "The FII selling trend witnessed in September and October continued in early November, too. In the first three days of November FIIs sold equity for Rs 3063 crores through the cash market." 

He, however, said this selling trend is unlikely to continue going forward since the main trigger for FII selling, the rising bond yields, has reversed. After peaking at 5 per cent on 19th October the 10-year US bond yield started to decline; during the last two days, the decline has been steep, taking the yield down sharply to 4.66 per cent on 3rd November. The main trigger for this reversal in bond yields is the subtle dovish commentary from Fed chief Jerome Powell that “despite elevated inflation, inflationary expectations remain well anchored.” 

The market has interpreted this statement as the end of the rate hiking cycle. That’s why yields have corrected sharply. "FII selling is likely to be subdued, going forward. They may even turn buyers, not to miss the rally in the Indian market. Frontline banking, automobiles, capital goods, and mid-caps in IT and real estate are poised to do well," Vijayakumar said. 

Trend in global markets: Deepak Jasani, Head of Retail Research at HDFC Securities said Nifty remained range bound through November 3 after a higher opening. In the process, he said, it rose for the second consecutive session and closed 0.51 per cent or 97.4 points higher at 19230.6. "Most Asian stocks rose on Friday, encouraged by strength on Wall Street and increased bets that the US Fed was done with its run of interest rate hikes. European stocks posted modest gains." 

India's October services accelerated at its slowest pace since March as output and new business expansion remained soft due to inflationary pressure, a private survey showed. 

At 58.4 in October, the seasonally adjusted S&P Global India Services PMI Business Activity Index indicated a substantial upturn in output, according to the recent government data. This was despite the headline figure falling from 61 in September and signalling the slowest rate of expansion since March. 

Technical Outlook: “Nifty rose for the second consecutive session with an up gap; however, it did not close at the intra-day high. In the process, it formed a high-wave type candle. On weekly charts, Nifty rose 0.96 Per cent after two down weeks. The up move seems to be a bounce so far and not a fresh rise and has some legs to run. Nifty could face resistance in the 19333-19480 band on the upside, while 19047 could offer support in the near term,” Jasani said.  

Bank Nifty: Kunal Shah, Senior Technical Analyst at LKP Securities, said: "The Bank Nifty index had a strong opening but went into consolidation at higher levels. It encountered difficulty surpassing the immediate resistance level of 43,500, where a significant amount of call writing was observed. The lower-end support for the index is situated at 42,800, and a breach below this level could intensify selling pressure."   

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