Sensex, Nifty this week: Dalal Street to keep watch on CPI, WPI, US core inflation for cues

The Indian markets ended significantly lower in the last week, with a decline of over 1.5 percent amid foreign fund outflows. This week, India’s headline retail inflation data (CPI), Wholesale Price Index (WPI), bank loan and deposit growth, US Fed Chair Powell’s speech, and US core inflation rate are some of the major events that will keep the markets buzzing. 

Economic data: In the coming week, investors will be eyeing major macro-economic data for more cues starting with the Consumer Price Index (CPI) or headline retail inflation data for April, which will be out on May 13. Headline retail inflation fell to 4.85 percent in March, the lowest since May 2023, and lower than the forecasts of 4.91 percent. Retail inflation stood at 5.09 percent in February. 

On May 14, market participants will be watching for the Wholesale Price Index (WPI) data for April. The Exports and Imports data and Passenger Vehicles data are awaited on May 15. Further, investors will be eyeing data on Bank Loan and Deposit growth, and Foreign Exchange Reserves on May 17. 

Major quarterly results: In the last leg of ongoing result season, traders will be eyeing earnings of the remaining prominent companies, including Tube Investments of India, Aditya Birla Capital, BASF India, Shree Cements, Radico Khaitan, V-Mart Retail, Power Finance Corporation, Rail Vikas Nigam, LIC Housing Finance, Granules India, Trident, Hindustan Aeronautics, Biocon, Crompton Greaves Consumer Electrical, JSW Steel, Atul Auto, NHPC, TV Today Network, and Mindteck (India).  

US market data: On the global front, investors would be eyeing some important economic data from the world’s largest economy, the US, starting with Consumer Inflation Expectations on May 13. On the same say, investors will be looking for Fed Vice Chair Jefferson’s speech for more directional cues. Producer prices in the US and Fed Chair Powell’s speech are expected on May 14. 

Core Inflation Rate, Retail Sales, and EIA Crude Oil Stocks will be released on May 15, Initial Jobless Claims, Export and Import prices, Industrial Production on May 16 and Baker Hughes Oil Rig Count on May 17 will also be keenly watched. 

Market Outlook: Throughout the week, the Indian markets largely exhibited a downward trend, signalling an emerging pattern where investors are opting to sell during rallies. “This inclination stems from the domestic market's premium valuation and concerns surrounding the elections due to a lower voter turnout. Despite Q4 domestic earnings largely meeting expectations, there's a noticeable moderation in the overall earnings landscape,” Vinod Nair, Head of Research at Geojit Financial Services commented. 

“A sector-specific action was visible in FMCG and auto stocks, aided by an expectation of a revival in rural demand in H1FY25. Whereas PSU banks underperformed due to the RBI's tighter norms on lending to projects under development. On the global front, weaker US payroll data has heightened expectations of potential rate cuts by the Fed. Moreover, the BoE's stance to keep the interest rate status quo, as widely expected, supported global investor sentiment,” he added. 

“We expect the current trend in the domestic markets to continue in the short term due to election-led uncertainties. In the data-hectic week ahead, investor attention will be focused on the release of India and US CPI data, Europe and Japan’s GDP releases, and the FED chair speech. Furthermore, the next set of Q4 results will also attract market sentiment,” said Nair.  

Technical Outlook for Nifty: Deepak Jasani, Head of Retail Research at HDFC Securities said, Nifty gained for the day but logged its worst week in nearly two months on May 10 as nervous election-related reports continued albeit at a slower pace. During close, Nifty was up 0.44 percent or 97.7 points at 22,055.2. 

Jasani highlighted that India's strong earnings are bolstering its position, which is evident from the latest ranking from Citi Research that upgraded India to 'overweight' in its emerging market allocation. Despite the recent rally in the world's second-largest economy, Citi Research downgraded China to 'neutral' due to the weakening fundamentals. 

“Nifty formed an inside day on May 10 taking support from the uptrend line on a closing basis. On a weekly basis, Nifty fell 1.87 percent - the sharpest fall since the week ended March 15, 2024. On weekly charts, Nifty formed a long bear candle. Nifty could after a small bounce continue the downtrend. The Nifty could stay in the 21,777-22,232 band for the near term,” Jasani said. 

Bank Nifty: Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, said the Bank Nifty index remained under a bear grip while encountering resistance at elevated levels. An immediate resistance for the index stands at 48,000 coinciding with the highest Open Interest on the call side, he added. “A breakthrough above this level could trigger fresh short-covering moves. On the downside, the index finds support at 47,050, represented by the 100-day exponential moving average (EMA). Sustaining above this level may pave the way for potential pullback moves in the index,” Shah said.