Weekly market wrap: Nifty, Sensex post worst week in a month amid geopolitical tensions

Weekly market wrap: Indian equity markets witnessed their worst weekly performance in a month during the holiday-shortened week ended April 19, 2024. This decline is attributed to rising geopolitical tensions, particularly the escalating conflict between Iran and Israel. The global investor sentiment shifted towards safe-haven assets, pushing gold prices above $2,400 per ounce during the week.

Market performance

The benchmark indices, Sensex and Nifty, fell by 1.6 per cent and 1.7 per cent respectively. Broader markets underperformed even further, with BSE Midcap and Smallcap declining 2.2 per cent and 1.0 per cent week-over-week (WoW). Sectoral analysis by SBI Securities revealed that all sectors ended negative on the BSE, with BSE IT experiencing the sharpest decline at 4.6 per cent lower WoW.

Experts point toward the significant impact of geopolitical developments on global markets. Investors will be closely monitoring these developments next week to gauge their continued influence.

Earnings season and US data

The upcoming week will also be marked by the earnings season, with Reliance Industries' March quarter results being a major focus for investors. In the US, key data points such as the 1QCY24 GDP number, core PCE index, and initial jobless claims (through April 20th) will be on their radar.

In the near term, SBI Securities recommends that investors prioritise quality businesses with strong earnings growth potential to navigate market volatility. The report identifies the zone of 21,800-21,750 as crucial support for the Nifty. If this zone holds, the index is expected to experience a pullback rally to the level of 22,350-22,400, followed by 22,600 in the short term. Conversely, a sustained move below 21,750 could lead to a correction down to 21,450-21,300.

Corporate highlights

• Infosys' 4QFY24 consolidated revenue grew marginally year-over-year (YoY) but declined slightly quarter-over-quarter (QoQ). However, net profit witnessed significant growth.
• Angel One reported strong growth in revenue and profit for 4QFY24, with the highest ever client addition during the quarter.
• Bajaj Auto's standalone revenue grew YoY, with improved margins. The company's profit after tax (PAT) also increased YoY.
• Vesuvius India inaugurated a new plant to expand its manufacturing capabilities in India.
• TARC achieved record pre-sales figures for FY24 and 4QFY24.
• Brigade Enterprises reported its highest ever pre-sales figures for FY24 and 4QFY24.
• Landmark Cars reported growth in consolidated proforma revenue for FY24 and 4QFY24.
• Jio Financial Services announced a joint venture with BlackRock to undertake wealth management business in India.
• Ambuja Cements received additional investment from the Adani family.
• RVNL signed a MoU with a Turkish firm for collaboration in infrastructure projects.
• SJVN formed a joint venture with an Assam power distribution company for renewable energy projects.

Domestic and global economic updates

• India's wholesale inflation remained subdued in March 2024.
• India's trade deficit narrowed in March 2024 compared to February 2024. Merchandise exports reached record highs.
• Domestic air passenger traffic increased YoY in March 2024.
   

What's ahead: Technical analysis by SBI Securities

The formation of a "Piercing Line" candlestick pattern on the Nifty daily chart is seen as a potential bullish reversal signal, especially considering its emergence near a critical support zone, according to SBI Securities. This, combined with other technical indicators, suggests a possible pullback rally in the near term.

"In addition to the bullish formation observed, the index has successfully reclaimed its 50-day EMA level (22110). Particularly notable is the daily Relative Strength Index (RSI), which has found support around the 40-42 zone and has experienced a significant rebound. It's worth highlighting that throughout this calendar year, this zone has consistently served as a robust support level for the RSI," according to SBI Securities.