Election outcome, MSCI rejig among 8 factors to likely impact stock markets this week

“The RSI has entered a bullish crossover near the oversold zone, suggesting positive momentum. The sentiment appears favorable for a meaningful rally in the short term, as long as the index stays above 23,600. Immediate resistance is seen at 23,960–24,000. A decisive move above 24,000 could trigger a rally toward 24,500. On the downside, supports are placed at 23,750 and 23,550,” De said.
Factors that are likely to impact movement when markets reopen this week:

Assembly Elections
With the Bharatiya Janata Party led Mahayuti alliance sweeping Maharashtra, D-Street is expected to take the development positively when markets reopen. The alliance ended-up with 230 seats out of 288 which went to polls.

In Jharkhand, JMM alliance wrested back the power, winning 56 out of 81 seats.

Market experts hailed the Maharashtra results calling it favourable for the D-Street as Maharashtra is a large state and commercial capital of the country while not seeing any adverse impact of Jharkhand’s loss.Also Read: D-Street experts hail BJP alliance’s emphatic Maharashtra victory, see policy continuity in state (Please put the link) MSCI November rejig
MSCI November rejig kick-in on Monday that will see BSE, Voltas, Alkem Laboratories, Kalyan Jewellers and Oberoi Realty becoming part of the MSCI Global Standard Index. As a consequence of this, India is expected to see net FII passive inflows of approximately $2.5 billion due to the rebalance, according to Nuvama Alternative & Quantitative Research.

Also Read: MSCI November rejig: BSE, Voltas among 5 inclusions; India to gain $2.5 billion in passive flows

US Markets
Domestic markets will take cues from their overseas peers, especially those on Wall Street.

Major indices on Wall Street ended in the green on Friday with the Dow rising to a new record high extending a post-election US equity market rally. The blue-chip index piled on 1% to end the day at 44,296.51, narrowly overtaking a record set earlier this month. The broad-based S&P 500 climbed 0.4% to 5,969.34, while the tech-rich Nasdaq Composite Index added 0.2% at 19,003.65.

4) FII / DII Action
On Friday, the foreign institutional investors (FIIs) were net sellers at Rs 1,278.37 crore while the domestic institutional investors (DIIs) were net buyers at Rs 1,722.15 crore.

Foreign Portfolio Investors (FPIs) have been net sellers of Indian equities at Rs 26,533 crore in November so far. The total outflows for 2024 so far stands at Rs 19,940 crore versus Rs 1,00,245 crore at the end of September.

5) Technical Factors
Market expert Santosh Meena, who is Head of Research at Swastika Investmart recommends caution due to lingering headwinds such as geopolitical tensions, a rising dollar index, and increasing US bond yields notwithstanding a temporary bottom which the market appears to have established now.

Decoding the charts, Meena sees Nifty finding support around 23,200, coinciding with the 61.8% Fibonacci retracement level of the previous rally (from the election result day low to the high of 26,277). “It has reclaimed its 200-DMA, an encouraging technical development. To sustain this momentum, Nifty must cross its 20-DMA around 24,070, with the next key resistance level at 24,500,” this analyst said.

6) Rupee Vs Dollar
The Indian rupee weakened to its lowest level of 84.5075 against the US dollar on Friday before ending higher as the central bank’s intervention supported the currency in the face of the US dollar jumping to a two-year high. The currency was marginally lower week-on-week.

The dollar index climbed to a peak of 108.09 on Friday, its highest since November 2022, before paring gains to last quote up 0.5% at 107.69. The greenback was boosted by weakness in the euro and British pound following weak economic data for Germany and the UK.

Meanwhile, the Reserve Bank of India (RBI) has also asked traders to avoid buying spot dollars to execute arbitrage trades.

“The RBI will mostly be okay with a gradual depreciation of the rupee and will continue with their intervention. We expect the rupee to fall to 85 to the dollar by December-end,” Anshul Chandak, head of treasury at RBL Bank, said.

The rupee has weakened nearly 0.5% so far in November, hurt by overseas investors pulling out over $4 billion from local equities and debt and as the dollar rallied following Donald Trump’s election victory on November 5.

7) Crude Oil
Oil prices climbed about 1% on Friday, settling at a two-week high, as the intensifying war in Ukraine this week boosted the market’s geopolitical risk premium. Brent futures rose 94 cents, or 1.3%, to settle at $75.17 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.14, or 1.6%, to settle at $71.24.

Both crude benchmarks were up about 6% for the week, their highest settlements since November 7 as Moscow stepped up its Ukraine offensive after Britain and the U.S. allowed Kyiv to strike deeper into Russia with their missiles.

8) IPOs this week
The primary market will see six new public offers open for subscription in the SME segment, while there is no new IPO in the mainboard segment. The public issues are of Rajesh Power Services IPO, Rajputana Biodiesel IPO, Abha Power and Steel IPO, Apex Ecotech IPOs, Agarwal Toughened Glass IPO and Ganesh Infraworld IPO.

Apart from the new public offerings, the Street will also see 4 listings including that of Enviro Infra Engineers and NTPC Green, whose issues opened in the week gone by.

(Inputs from agencies)

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