Q4 results, Fed minutes among 7 factors to drive D-Street traders' strategy in a volatile market this week

MUMBAI: Volatility is likely to be the theme on Dalal Street in the coming week, as investors initially digest the RBI’s move to withdraw circulation of Rs 2,000 banknotes.

A slew of companies are slated to release their quarterly numbers, which will continue to drive stock-specific action.

Further, the US Federal Reserve will release the minutes of its meeting that took place earlier this month.

Therefore, investors have a lot on their platter to look at and decide on the trading strategy accordingly.

In the week gone by, benchmark indices took a breather with the BSE Sensex shedding 0.5% on a week-on-week basis.

“The last of the Q4 results are expected in the coming week. This could impact the individual stock prices, but the overall mood will be decided by the FPI flows and developments on the US debt default situation,” said Deepak Jasani, head of retail research, HDFC Securities.

Q4 Earnings
We are in the last leg of the earnings season, and a plethora of companies are slated to release the numbers for the March quarter in the coming week. Among Nifty 50 majors, Bharat Petroleum Corp, Hindalco Industries, Grasim Industries, Sun Pharmaceutical Industries, Oil and Natural Gas Corp, and Mahindra & Mahindra will release their quarterly and annual numbers.

Divi’s Laboratories reported its numbers on Saturday, and therefore, the stock will react to the same on Monday. The drugmaker reported a sharp 64% year-on-year (YoY) fall in the consolidated net profit for the March quarter to Rs 321 crore, and revenue declined 22.5% YoY to Rs 1,951 crore. The board has approved a dividend of Rs 30 a share for the financial year ended March.

US Debt Deal
The ongoing negotiations regarding raising the debt ceiling in the US will continue to be on the watchlist of investors globally.

Without a deal, the US could default on its over $31 trillion of debt.

Last week, Treasury Secretary Janet Yellen had warned about the repercussions on the US as well other markets if the debt ceiling wasn’t raised before the June deadline.

Fed Meeting Minutes
On Wednesday, the US Federal Reserve will release the minutes of the meeting that took place earlier this month.

The Fed has raised the federal funds rate by 25 basis points, and also gave some indications towards a pause on rate hikes.

F&O Expiry
The week will also see the expiry of the May derivative series on Thursday. This is likely to bring in some volatility in the market.

The May series had begun on a stronger note amid the relentless buying by foreign institutional investors. Net-net, the Nifty 50 may end the series on a positive note if there are no shocks from the global front.

Corporate Action
Companies such as Sun Pharma Advanced Research Co, Capri Global, Century Textiles, Somany Ceramics, Varroc Engineering, and Bajaj Electricals are expected to have meetings in the coming week to consider fundraising.

The board of Axia Cotton is scheduled to meet on May 23 to consider buyback of shares.

The board of JB Chemicals will meet next week to consider a stock split.

Meanwhile, Hinduja Global Solutions’ share buyback programme is slated to open on May 22.

FII Flows
One of the primary reasons for the strong performance of the market has been the continued buying by foreign institutional investors.

FIIs have poured in close to a whopping $6 billion since March. They have been big buyers in the banking and financial services sector given the strong earnings reported by the lenders and the positive growth outlook. In fact, data shared by NSDL showed that the weight of banking, financial services and insurance (BFSI) stocks in the portfolio of foreign investors was at a 26-month high of 34.2% in April. Therefore, FPI action will be very closely tracked by Dalal Street investors.

Technical Indicators
The correction for three consecutive days in the last month saw the Nifty 50 move very close to its key support of 18200 points. The index on Friday ended at 18203.40 points, up 0.4%.

According to Ashwin Ramani of SAMCO Securities, unless Nifty gives a higher close on the daily chart, the correction is likely to continue.

“For Nifty, 18,050 is likely to act as an immediate support, while a break of this level can even take it to 17,800 levels, where the next visible support is placed,” Ramani said.

On the upside, 18400 is likely to act as a resistance for Nifty in the expiry-bound week.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)