Stock Market Outlook: Quarterly Earnings, Fed Interest Rate Decision, Macro Data To Dictate Market Trend

The US Fed interest rate decision, domestic macroeconomic data announcements and ongoing quarterly earnings are some of the major factors that will drive the stock markets in a holiday-shortened week, analysts said. 

Besides, monthly auto sales numbers and the LIC IPO will also remain in focus, they added.

Equity markets will remain closed on Tuesday for Id-Ul-Fitr (Ramzan Id).

"The market is likely to kick off this week on a somber note after a sharp fall in the US market then the focus will shift to the outcome of the US FOMC meeting, which is crucial amid record inflation and growth worries. The FOMC meeting is scheduled for Wednesday and the Indian market will react to it on Thursday. This week is going to be a truncated one as the market will remain shut on Tuesday on account of Ramzan Eid. 

"Global cues will dominate because apart from the FOMC meeting, there will be a release of BOE interest decisions, US payroll numbers, and worldwide PMI numbers," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

The movement in commodity prices, dollar index, and FIIs' behavior will remain other key factors, he added.

On the domestic front, we will have monthly auto sales numbers whereas there will be lots of Q4 earnings, including  Reliance, Britannia, HDFC Ltd, Adani Enterprises, Heromoto Corp, Tata Steel, Titan, Kotak Mahindra Bank, Tata Power, Meena said.

"This week is a holiday-shortened one and it’s going to be critical as some of the important events and data are lined up. Participants will first react to auto sales numbers. On the macro front, markets will be eyeing manufacturing PMI and services PMI data on May 2 and May 5, respectively. The much-awaited IPO of insurance behemoth, LIC, is opening for subscription on May 4. On the global front, the US Fed meeting outcome will be in focus," said Ajit Mishra, VP Research, Religare Broking.

The country's largest life insurer LIC on Wednesday set the price band at Rs 902-949 per share for its Rs 21,000 crore initial public offering (IPO), which will open for subscription on May 4.

Last week, the Sensex dipped 136.28 points or 0.23 per cent.

Yesha Shah, Head of Equity Research, Samco Securities, said, "Globally, the FOMC meeting will be in the limelight. As market participants attempt to read between the lines of Fed’s policy actions, any surprises can result in panic reactions in global markets". 

"Back home, the largest IPO, LIC, is poised to go public. Considering the mammoth issue size, the IPO is expected to test investors' appetite and the liquidity routed towards the IPO can mildly influence secondary markets." 

Shah further added that the monthly auto sales numbers are likely to attract the attention of investors seeking to anticipate future patterns in auto stocks. 

"All these events coupled with the current earnings season can make markets choppy this week," Shah said.

Markets would also track the investment pattern of foreign institutional investors, movement in Brent crude, and the rupee. 

"Going ahead, volatility is likely to continue as the focus will shift to central bank policy meetings at both the US Federal Reserve and the Bank of England. Apart from this, a slew of economic data releases, monthly auto sales data and ongoing earnings season will keep investors busy.

"The mother of all IPO - LIC will also hit Dalal Street on 4th May 2022, which could pull out liquidity from the market and exert some selling pressure," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.