Dalal Street Action Next Week: From Q2 Results, Rising Tensions & Global Cues; Key Market Triggers?

The Indian stock market closed the week on a disappointing note, with both the Nifty 50 and Sensex registering losses. Dragged down primarily by auto and banking stocks, the indices couldn't recover despite some support from pharma and metal sectors. As a result, the Nifty 50 fell by 0.14%, closing below the 25,000 mark for the third consecutive day at 24,964. Similarly, the Sensex dropped by 0.28%, finishing at 81,381.

The broader market mood has been subdued, with geopolitical tensions, macroeconomic data, and corporate earnings dominating investor sentiment. With October nearing its midpoint, the Indian stock markets have seen a steep decline, marking the worst monthly performance since December 2022. Here's a closer look at the key market events and triggers that investors will keep an eye on in the coming week.

Both Nifty 50 and Sensex ended the week in the red, reflecting losses of 0.20% and 0.40%, respectively. Investor concerns over the Israel-Iran conflict, foreign portfolio investor (FPI) outflows, and a potential earnings slowdown further dampened market sentiment. Additionally, high stock valuations have raised questions about sustainability in an environment of global uncertainty.

Since the start of October, Nifty 50 has dropped by 3.28%, marking its steepest monthly fall in over nine months. The index has fallen by 5.34% from its recent high of 26,277 points. Likewise, the Sensex has declined by 5% from its peak of 85,978 points, with a 3.46% decline this month alone.

Key Triggers for the Upcoming Week
As we head into the third week of October, investors are expected to monitor several key triggers that could sway the market direction. These include corporate earnings for Q2FY25, foreign fund flows, global macroeconomic data, and crude oil prices.

Corporate Earnings
Earnings season will be a critical factor in the coming week, with companies across multiple sectors scheduled to release their Q2FY25 results. Some of India's largest corporations are expected to report their performance, including Reliance Industries (RIL), which has scheduled a meeting for October 14, 2024, to review and approve its standalone Q2 results.

The focus will also be on other major companies like Infosys, Axis Bank, Wipro, Jio Financial Services, and HDFC Bank, all of which are set to declare their Q2 results next week. Given the market's sensitivity to earnings data, these reports will likely play a decisive role in determining market movements.

IPOs and Listings
The primary market will also witness a flurry of activity in the coming week. Notably, Hyundai Motor India is preparing to launch its Rs 27,000 crore IPO, which is expected to be the largest initial public offering (IPO) in India to date. Investors will be closely watching the progress of this offering, as it could significantly impact the broader market sentiment.

In addition to Hyundai, the market will see the debut of three other IPOs, with one on the mainboard and two in the small and medium enterprise (SME) segment. Furthermore, three IPO listings are slated for the week.

FII and DII Activity
Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have played a significant role in influencing market movements recently. On October 11, DIIs made net purchases of shares worth Rs 3,731 crore, while FIIs registered a net sell-off amounting to Rs 4,163 crore.

For the week, DIIs bought shares totaling Rs 11,907 crore and sold Rs 8,176 crore worth of shares, reflecting their net buying position. In contrast, FIIs acquired shares worth Rs 6,220 crore but offloaded Rs 10,382 crore, further fueling concerns about continued foreign fund outflows.

Global Cues and Macro Data
Global cues will remain crucial for market participants, with particular attention on the geopolitical situation in the Middle East. Additionally, investors will be looking for signals from China over the weekend, as the Chinese Ministry of Finance has hinted at a meeting where potential stimulus measures could be discussed. Positive news from China could provide a much-needed boost to global markets, including India.

Domestically, several key economic indicators are slated for release, including India's WPI Inflation (YoY), CPI Inflation (YoY), Bank Loan Growth, and Deposit Growth data. Internationally, investors will track US Initial Jobless Claims, Core Retail Sales, Industrial Production, China's GDP, and the UK's CPI Inflation data.

Crude Oil Prices
Crude oil prices remain a key focus for investors, as global supply dynamics have been affected by geopolitical tensions and natural disasters. On Friday, oil prices dipped slightly, but they still managed to secure a second consecutive weekly gain.

Brent crude futures fell by 36 cents or 0.45%, closing at $79.04 per barrel, while US West Texas Intermediate (WTI) crude futures declined by 29 cents or 0.38%, settling at $75.56 per barrel. Concerns over supply disruptions in the Middle East and the impact of Hurricane Milton on fuel demand in Florida have kept the market on edge.

Corporate Actions
Several major companies will trade ex-dividend next week, which could impact their stock prices. Tata Consultancy Services (TCS), Anand Rathi Wealth Ltd, and NRB Bearings Ltd are among the notable names that will go ex-dividend starting Monday, October 14, 2024.

With multiple factors in play, including corporate earnings, foreign fund flows, global macroeconomic data, and crude oil prices, the Indian stock market could experience increased volatility in the coming week. Investors will be keeping a close watch on how these elements unfold, particularly with the start of Q2FY25 earnings season and key global developments.