FOMC Meeting: F&O Expiry, FOMC Minutes Among Top 10 Factors That May Guide Markets Next Week

New Delhi: Bulls rallied a bit on Friday, thanks to heavy buying, which ended the five-week losing streak for benchmarks. However, the volatility continues to scare traders.

The benchmark indices, BSE Sensex and Nifty50, gained about 3 percent each. The indices gauged second-rung counters that outperformed major pairs, rising about 4 percent on the week.

This week, the domestic market moved along with its global peers. Concerns about the global economic slowdown and rate hikes took control of market sentiment, said Vinod Nair, Head of Research at

.



“FIIs continued their sell-off as they chased US high-yield bonds that added volatility to the Indian market,” he added. “As investors are now investing cautiously, value stocks should do well during this period of consolidation, supported by a dovish valuation.”

On the sector front, the BSE metals index rose more than 7 percent, while the BSE capital goods index rose more than 5 percent. The consumer goods, auto and real estate indices each gained more than 4 percent. The IT index was the biggest laggard with a 2 percent drop.

“We expect turmoil to remain high due to the scheduled monthly expiry,” said Ajit Mishra, vice president of research,

Brokerage.

“In line with the prevailing trend, global factors such as the performance of global markets, especially the US, China’s Covid update, and news from Russia and Ukraine will also remain on participants’ radar.”

Among sector indices, defensives such as the FMCG and pharmaceuticals look poised to rise further, while others may continue to trade mixed. Traders should align their positions accordingly and hold positions on both sides, he added.

Below are 10 key factors that may guide the markets this week:

May Series F&O Expiration

The May Series Derivatives will expire on Thursday, May 26, leading to increased market volatility as investors head toward the more uncertain expiration than the previous month. As traders rush to square or roll over their positions, the market may react accordingly.

Inflation and oil prices
Inflation figures continue to spook markets around the world. The Wholesale Price Index (WPI) reading jumped to new highs in April of 15.1 percent, posting a 13-month high of double-digit gains, thanks to rising prices for metals, crude , food items and more.

However, over the weekend, the government provided some relief to consumers by slashing gasoline and diesel prices. In addition, the government also cut excise taxes and customs duties on various products to reduce prices.

FOMC meeting minutes

The Federal Open Market Committee meeting minutes are a detailed record of the committee’s policy-setting meeting held about two weeks earlier. The minutes provide detailed information on the FOMC’s stance on monetary policy.

The FOMC minutes will be a key tracker for market players to keep track of upcoming rate hikes in the current year after the US Federal Reserve raised rates by 50 basis points, boosting rates rising interest. However, the market will read comments about aggressive short-term rate hikes.

US GDP

The US economy shrank 1.4 percent on an annualized basis in the first three months of the year, according to the first reading of US Q1 GDP. The world’s largest economy is due to release the second reading on Thursday, which is not expected to produce any material changes.

Concerns about stagflation and a possible recession can hurt the company. On the other hand, some pundits and economists still expect the US economy to grow this year, dismissing the first quarter as a blip.

FII sale

Over the past few months, foreign institutional investors have embarked on their sell-off in Indian equities, keeping markets under constant pressure. Overseas investors have extracted more than Rs 36 billion from the Indian stock markets. The trend is likely to continue this month as well.

fourth quarter numbers

Markets are heading into the tail end of earnings seasons for the March 2022 quarter. However, a handful of blue-chip companies, including

Bharat Electronic, , , , , , , , IndiGo, , , and will announce its fourth quarter earnings.

covid in china

Rising cases of Covid-19 in China and other nearby hubs are likely to be a threat to global markets, with the potential to affect production and the supply chain. The resurgence of cases may once again impose restrictions in various parts of China.

two listings

A couple of companies, Delhivery and Venus Pipes & Tubes, will make their Dalal Street debut next week, most likely on Tuesday. Venus Pipers & Tubes raised Rs 165.42 crore through its flagship offering. The issue, which sold its shares in the range of Rs 310-326 each, was subscribed for more than 16 times.

On the other hand, logistics startup Delhivery will also go public on Tuesday. The company’s Rs 5,235 crore issue received a muted response from investors as the issue was subscribed for only 1.63 times. The company sold its shares in the range of Rs 462-487 each.

two IPOs

The primary markets will continue in action next week with two issues, one ongoing and one new, to attract funds from the primary markets. Both numbers will close in the same week.

eMudhra’s IPO worth Rs 412.79 crore, which opens on Friday, will close for bidding on Tuesday, May 24, as the company is selling its shares in the range of Rs 243-256 each. a. Another issue, Aether Industries, will be open for subscription between May 24-26, as the company looks to sell its stake in the range of Rs 610-642 per share to raise Rs 808 crore.

technical perspective

“The Nifty 50 ended the week on a positive note with both the benchmark and Bank Nifty indexes bouncing back from last week’s lows. Despite the rebound, we believe the market has not bottomed out as trading patterns Nifty prices show the uptrend has been significantly hurt, said Yesha Shah, director of equity research at Samco Securities.

“A short-term bounce cannot be ruled out at this point, it is unclear if the bounce will be a relief rally or the start of a new bull run. Taking all of this into account, we recommend that traders maintain a cautious bullish stance for next week, as long as the Nifty doesn’t drop below the 15,700 levels,” he added.

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