Dalal Street Action This Week: Market Rally To Continue In The 1st Week Of FY25; RBI Policy Awaited

The markets closed the truncated week on a strong note, posting gains of around 1% for benchmark indices, signalling an optimistic outlook after a period of consolidation in the preceding weeks. The rally, which saw the Nifty 50 climb 230 points to 22,327 and the BSE Sensex surge by 819 points to 73,651, was primarily driven by a broad-based participation across sectors, with the exception of IT.

Investors and analysts are upbeat about the forthcoming week, which marks the beginning of the new financial year FY25, foreseeing a positive trajectory. The focus will be on several key indicators including auto sales data, manufacturing, and services PMI numbers, the RBI's interest rate decision, and expectations surrounding the March quarter earnings for FY24.

The Nifty Midcap 100 and Smallcap 100 indices outperformed the benchmarks, registering gains of 1.6% and 1.4% respectively, indicating a robust sentiment across the broader market. Looking back at the fiscal year 2023-24, market performance was notably strong, with the Nifty 50 surging by 28.6%, and the Nifty Midcap 100 and Smallcap indices recording remarkable gains of 60% and 70% respectively.

Here are some key factors investors will be keeping a close eye on

Auto Sales

The new fiscal year FY25 will kick off with the release of auto sales data for March. The market focus will be on key players such as Maruti Suzuki India, Tata Motors, Hero MotoCorp, and others. While double-digit year-on-year growth is anticipated in retail two-wheeler sales, the performance of passenger vehicles is expected to see single-digit growth. However, commercial vehicle and tractor sales for March 2024 might witness subdued performance.

RBI Policy

The interest rate decision by the Monetary Policy Committee, scheduled during its three-day meeting starting April 5, will be closely watched. Economists anticipate no change in policy rates at this juncture, with future rate cuts hinging largely on actions by the US Federal Reserve. However, market participants will closely analyze the accompanying commentary for any hints of future policy direction.

Domestic Economic Data

On the domestic front, attention will be on the final HSBC Manufacturing PMI data for March, slated for release on April 2, as well as Services PMI numbers due on April 4. The recent flash manufacturing Purchasing Managers' Index (PMI) for March surged to its highest level since February 2008, while services PMI witnessed a slight dip from the previous month. Additionally, data on bank loan and deposit growth for the fortnight ended March 22, along with foreign exchange reserves for the week ended March 29, will be released on April 5.

Fed Chair Jerome Powell's Speech

As the world economy continues its dynamic trajectory, global markets are poised for a week of keen observation, punctuated by key speeches, economic data releases, and market movements. Central to the upcoming week's events is the anticipated speech by Federal Reserve Chair Jerome Powell, scheduled for April 3. Powell's remarks, along with speeches by several other Fed officials, hold significant sway over market sentiments.

In his recent address in San Francisco, Powell emphasized the Federal Reserve's cautious stance on rate cuts, citing strong employment data as a pivotal factor. The central bank remains committed to closely monitoring inflation, aiming for sustained levels near their 2% target. Despite expectations among investors for potential rate cuts starting in June 2024, Powell's remarks signal a measured approach to monetary policy adjustments.

Global Macro Economic Data

Global economic data releases will also be under the spotlight, with markets keeping a close eye on manufacturing and services PMI final data for March from major economies such as the US and China. Additionally, indicators such as unemployment rates, non-farm payrolls, JOLTs job openings, quits, and factory orders in the US will provide further insights into the health of the world's largest economy.

Crude Oil Prices

The trajectory of oil prices remains a focal point for market participants. Brent crude futures surged to their highest closing level since October 2023, reaching $87.07 a barrel by the end of March 2024. This upward momentum, sustained over the past three months, reflects a 6.3% increase in March alone and a substantial 13% rise over the quarter. Factors such as OPEC+ output cuts and market anticipation of lower interest rates have contributed to this surge. Moreover, signs of Russia's compliance with OPEC production pledges may further bolster oil prices, posing risks for net oil-importing countries like India.

Public Issues

In the realm of initial public offerings (IPOs), the new financial year (FY25) commences with the launch of Bharti Hexacom's IPO. The public issue, valued at Rs 4,275 crore, is set to open for subscription on April 3, with a price band of Rs 542-570 per share. While no new IPOs are slated for the SME segment, several companies including Radiowalla Network, TAC Infosec, and others will close their IPOs, adding to the flurry of market activity.

F&O Data

Meanwhile, on the derivatives front, options data suggests potential resistance for the Nifty 50 at the 22,500-22,600 levels in the new series, with support expected at 22,200 and 22,000 levels. Notable open interest is observed at the 22,600 strike on the Call side and the 22,300 strike on the Put side, indicating key levels of interest for market participants.

The week ahead also witnesses the listing of SRM Contractors from the mainboard segment, along with nine companies from the SME segment making their debut on April 3. Notable among these are Vishwas Agri Seeds, Naman In-Store (India), and GConnect Logitech and Supply Chain, underscoring the vibrant activity in the primary market.

As market volatility, as measured by the India VIX, rebounds slightly, closing at 12.83 after a previous week's correction, investor sentiment remains cautiously optimistic. While uncertainties loom, driven by factors ranging from monetary policy decisions to geopolitical tensions, market participants navigate this landscape with a watchful eye.

Disclaimer:

The opinions and suggestions provided above represent the views of individual analysts and do not reflect those of GoodReturns or the author. We recommend investors consult with certified experts before making any investment decisions.