Market Next Week: Analysts say global trends, Q4 corporate earnings, macro indicators and LIC IPO are major drivers for indices

The ongoing quarterly corporate earnings, global trends, macro indicators, and the initial public offer (IPO) of Life Insurance Corporation of India (LIC) would be the major driving factors for the stock market next week, analysts estimated.

The analysts suggested investors would also keep a tab on the movement of foreign institutional investors who are on a selling spree in the domestic equity market for the past many days.

"Inflation concern and monetary tightening across the globe are key concerns for the equity markets. Equity markets are under the strong grip of bears however they look extremely oversold and due for a pullback rally,” Santosh Meena, Head of Research, Swastika Investmart Ltd said.

He added, “The sell-off in the US market, especially in tech stocks, was very severe and there is some stability in the last two trading sessions that may provide some respite to the bulls.”

Meena said there are no major cues for this week therefore direction of global cues will be important, however some stock-specific movement will continue amid the tail-end of Q4 earnings.

"On the domestic front, listing of LIC IPO will be a key sentimental trigger for the Indian equity market. FIIs are selling relentlessly whereas DIIs are trying to compensate for their selling therefore their behaviours will also play an important role in the direction of the market. Movement of the dollar index, crude oil prices, and direction of rupee will be other important factors," he added.

Vinod Nair, Head of Research at Geojit Financial Services said, “Lingering concerns over the weakening rupee, global interest rate hikes, elevated inflation numbers, and lockdowns in China kept the markets on the edge this week. The release of higher-than-expected US CPI data suggests that the inflationary pressure will persist in the near term.”

“However, it is presumed to have peaked and will gradually decline in line with the ongoing fall in crude and other commodity prices, & a slowdown in the economy. The Fed surprised the market with a hawkish stance, limiting liquidity, which limits further setbacks in the future,” he added.

Vinod Nair also expected stability in the market as FIIs selling reduces factoring inflation and Fed policy. On the other hand, DIIs have lost their confidence after bearing continuous losses.

Investors prefer defensive sectors like IT and Pharma supported by the weakening rupee, given the current volatility in the market, he said, adding that the major determinant for market direction would be the pace of decline in inflation in response to the Fed measures.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said, "Rising bond yields, high inflation levels and monetary policy tightening action by central banks globally will weigh on near term sentiments which could keep markets volatile. Stock-specific action will continue due to ongoing result season."

Bharti Airtel, DLF, IOC, ITC, IDFC, JK Tyre & Industries, and NTPC are among the companies that will announce their financial results this week.

Last week, Sensex lost 2,041.96 points or 3.72 per cent, while the Nifty plunged 629.10 points or 3.83 per cent.

(With PTI Inputs)