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Five key factors that are likely to drive market in the coming week

WT24 Desk
NEW DELHI: The domestic equity market ran a record marathon during the week gone by, with the indices getting past their previous milestones they had hit just two weeks back. Two positive developments, Emmanuel Macron’s win in the French presidential elections and Indian Meteorological Department’s (IMD) forecast of 100 per cent rainfall this year, set the ball rolling for the stock market, according to The Economic Times.

On Friday, the benchmark indices slipped into the negative zone amid bouts of profit-taking on select counters and cautious stance of investors ahead of IIP and inflation data that came later in the day.

But overall, it was a week to remember that raised the bar for the benchmark indices for the coming weeks.

The S&P BSE Sensex shed 63 points on Friday to close at 30,188, while the Nifty50 index of the National Stock Exchange (NSE) lost 21.50 points to 9,400, with 32 constituents closing in the red.

On a weekly basis (May 5- May 12), the 30-share index added 1.1 per cent and the broader Nifty50 logged a gain of 1.22 per cent.

Among key events, Hudco IPO was the talk of the town last week, as the issue witnessed bumper demand from investors. On the final day of the bidding process, the issue got subscribed 79.47 times, making it a blockbuster hit.

The IPO to raise Rs 1,224 crore received bids for 16,22,12,70,600 shares against the total issue size of 20,40,58,747 shares, data available on the NSE website showed.

On the other hand, S Chand and Company made a tepid debut on the bourses on Tuesday. The stock even slipped into a discount to the issue price during the session. The tepid listing was in contrast with the strong demand it had seen during the initial public offering (IPO).

That said; let’s check out what’s in store for the market in the coming week. Going by the buzz on Dalal Street, we have collated a list of five key factors that are likely to sway your market through the week:

Next batch of earnings
Companies that are slated to announce their March quarter earnings next week include Bata IndiaBSE -0.88 %, Colgate-Palmolive (India), Punjab National BankBSE -1.86 %, Shree CementBSE -1.04 %, Tata Steel, Hindustan UnileverBSE 0.19 %, JSW SteelBSE 1.18 %, Bajaj AutoBSE 0.09 %, Bank of BarodaBSE -0.72 %, State Bank of IndiaBSE -0.29 % and Tata Power.

With most of the companies putting up a better-than- expected show, earnings is surely going to be a major factor in determining market movement in the coming week.

Economic indicators
The two key economic numbers –IIP and inflation – which were released on Friday after market hours are likely to have a bearing on the domestic stock market when it opens for trading on Monday. The CPI-based inflation dropped to a multi-year low of 2.99 per cent in April, putting pressure on RBI to cut interest rate after it took a hawkish stance in last policy review, citing upside risk to prices.Retail inflation stood at 5.47 per cent in April 2016.

On similar lines, the wholesale price index (WPI)-based inflation slipped to a four-month low of 3.85 per cent in April, as both food articles and manufactured items showed cooling in prices.

However, the industrial output data dampened the spirits as the numbers slipped to a four-month low contracting 1.2 per cent in February because of a decline in the manufacturing sector and lower offtake of capital as well as consumer goods, said a PTI report.

The Index of Industrial Production (IIP) had registered a 1.99 per cent growth in February last year. This apart, the government is expected to announce trade data for April on Monday (May 15).

Global cues
On the global front, China’s industrial production data for March 2017 is scheduled for release on Monday. US industrial production data for April 2017 is likely to be announced on Tuesday. Japan’s industrial production data for March 2017 is expected on Wednesday and the US initial jobless claims for the week ended May 12, 2017, is coming out on Thursday i.e. May 18.

Select sectors may grab limelight
In the words of Mustafa Nadeem, CEO, Epic Research, “In the coming weeks we are likely to see more activity in the metals index as there is a policy measure supporting the overall sentiment in this space. The banking sector may also remain in focus with fresh breakouts in the Bank Nifty.”
Technical factors
On the technical front, the Nifty50 registered yet another record high of 9,450 and eventually, despite some profit booking in the latter part, it managed to defend the 9,400 mark on a closing basis. Now, if we try to study the market movement (of last four months) on hindsight, we can clearly jump to a conclusion that the Nifty50 has been following a particular pattern that is, a sharp up move followed by some consolidation in small range and then once  ..again a breakout from the range to resume the uptrend,” says Vijay Singhania, Founder-Director, Trade Smart Online, a leading discount brokerage firm.

“We witnessed a similar thing during the week gone by and as a result, we can see the formation of a ‘Bullish Flag’ pattern on the daily chart. The potential target of this pattern comes to yet another milestone of 9,600,” said Singhania.

“We witnessed a similar thing during the week gone by and as a result, we can see the formation of a ‘Bullish Flag’ pattern on the daily chart. The potential target of this pattern comes to yet another milestone of 9,600,” said Singhania.

“Thus, we expect Nifty to continue this northward rally towards 9,600, where we would advise traders to start taking some money off the table. For the forthcoming week, the support would now be seen at 9,372–9,340. Any dip in the initial part of the week towards the mentioned support zone should be construed as a good buying opportunity,” he signs off.

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