Week Ahead: Auto sales, SEBI board meet, FII inflows, global cues among key market triggers as Nifty eyes 26,500

The Indian stock market closed September on a remarkably positive note after picking up an invincible bullish rally largely driven by strong global cues. As the new month begins, investors will closely monitor key market triggers such as domestic and global macroeconomic data, auto sales data, second-quarter corporate updates, market watchdog's board meeting, primary market action, foreign fund inflows, crude oil prices, and global cues.

Investors will see intense action in the domestic and corporate sectors in the first week of October. The market's bullish rally was fueled by the supersized 50-basis-point (bps) rate cut by the US Federal Reserve, which showed no significant concerns about the US economy and China's monetary stimulus.

Domestic equity benchmarks Sensex and Nifty 50 achieved fresh record highs for six consecutive sessions and logged a third straight weekly gain. The remarkable performance was primarily fueled by a robust rally in metals and financial stocks, which have seen significant buying interest amid improving global and domestic cues.

Also Read: Nifty 50 unbeatable since outsized US Fed rate cut: What should be your trading strategy amid high valuations?

After a strong start, the benchmark indices moved within a narrow range during the initial sessions. However, a sharp rally on Thursday allowed the indices to resume their uptrend. The continued optimism in the US markets and China’s newly announced stimulus measures contributed to the positive sentiment. 

The Nifty 50 rose by 0.23 per cent, reaching a fresh all-time high of 26,277 during Friday's trade before closing with a 0.14 per cent drop at 26,199. Notably, this marked the third straight session where the NSE index closed above the crucial psychological level of 26,000.

Similarly, the S&P BSE Sensex hit a new peak of 85,978, climbing 0.16 per cent. It ended the session at 85,615, a 0.30 per cent fall from its previous close, but stayed above the 85,000 mark for the third consecutive session. On the weekly front, the 30-share BSE benchmark jumped 1,027.54 points or 1.21 per cent while the Nifty surged 388 points or 1.50 per cent.   

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On the sectoral front, rate-sensitive sectors such as banking, financials, auto, and real estate were initially in the spotlight. Later in the week, metals and power also attracted attention. Despite this positive movement in key sectors, broader indices underperformed again, ending flat to marginally lower. 

Metals and commodity-related stocks outperformed, while IT and export stocks rallied in anticipation of a recovery in discretionary spending, as indicated by signals from American IT peers. For the week, metal stocks gained more than seven per cent in their biggest weekly rise since December 2022, outperforming other major indexes. 

Strong metal prices supported metal stocks in hopes that the new Chinese stimulus measures would boost its economy and global demand and lead to a decline in the dumping of steel products in countries like India.

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D-Street experts said the market responded positively to the US Fed’s rate cut and stable economic data points, accelerating foreign inflows and generating momentum in domestic markets. China’s economic stimulus announcement has bolstered investor confidence, resulting in notable positive momentum in global markets, particularly within Asian indices. 

“Softer commodity prices, including oil, are favourable for the domestic economy, and there is an expectation of a recovery in corporate earnings in H2FY25, driven by anticipated increases in government spending,” said Vinod Nair, Head of Research, Geojit Financial Services.

"A visible trend is that this rally was predominantly led by large-cap stocks, which are relatively fairly valued compared to mid- and small-caps, which show signs of exhaustion. A risk to the rally is elevated valuations. Given the stimulus and attractive valuations like China, FIIs are inclined to eastern Asian peers. Looking ahead, investors will be focusing on Q2 earnings, anticipating an improvement in earnings outlook," added Nair.

Also Read: US Fed delivers supersized 50 bps rate cut: FPI inflows to stronger INR—here’s how the verdict is ‘good’ for India

This week, the primary market will witness tumultuous action and keenly attract investors' attention as several new initial public offerings (IPO) and important listings are slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track corporate updates, global markets and macroeconomic data.

Here are the key triggers for stock markets in the coming week:

Auto sales, Q2 updates, macro data, SEBI board meeting

Domestically, the upcoming week marks the beginning of a new month, which means participants will closely monitor key data releases. Auto stocks will be under investors' radar as OEMs release their monthly auto sales data on October 1. 

Other important macroeconomic data, such as current account data, HSBC India Manufacturing PMI, HSBC India Composite PMI, and HSBC India Services PMI, will also be released this week.

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On the sectoral front, the focus could shift towards IT and banking as companies release pre-quarterly updates for the July-September quarter of the current fiscal (Q2FY25). This could drive stock-specific movements in the near term.

Capital markets regulator Securities and Exchange Board of India (SEBI) will conduct its board meeting on Monday, September 30, which may bring up announcements regarding foreign and domestic investors. Analysts say the decisions will likely reflect the government’s intention of making India a transparent, flexible, and easy-to-trade platform for offshore investors.

3 new IPOs, 12 listings to hit D-Street

In the mainboard segment, the Hyundai Motor IPO and the Afcons Infrastructure IPO will open for bidding soon; however, the IPO dates have not been announced as of the time of filing this story. 

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In the ongoing issues, Diffusion Engineers IPO will close for bidding on Monday, September 30. Three new issues will open for subscription in the SME segment, while six ongoing issues will close for bidding. 

Among listings, shares of Manba Finance will debut on stock exchanges BSE, NSE on September 30. Shares of KRN Heat Exchanger will be listed on October 3, while shares of Diffusion Engineers will debut on October 4. In addition, shares of nine SMEs will debut on either BSE SME or NSE SME this week.

FII Activity

Foreign institutional investors (FIIs) turned net buyers this month, injecting ₹25,215.25 crore into the cash segment so far, while domestic institutional investors (DIIs) purchased ₹25,214.25 crore in the cash segment so far.

Foreign portfolio investors (FPIs) invested ₹57,359 crore worth of Indian equities, and the net investment stood at ₹91,702 crore as of September 27, taking into account debt, hybrid, debt-VRR, and equities. This month, the total investment in debt markets is ₹8,543 crore. 

Regarding equities, September has logged the highest FPI inflows year-to-date (YTD), while the total investment is at a nine-month high. “Looking ahead, it will be interesting to monitor FIIs and their flow into India. September saw the highest FII inflows into Indian equities this year,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Also Read: FPIs continue buying streak, invest ₹57,359 crore in Indian equities; Sept logs highest inflows YTD on US Fed pivot

“However, with the Chinese market trading at nearly half the valuation of Indian equities, there may be a tactical shift of flows towards China after the recent stimulus. It's important to note that 95 per cent of foreign inflows to India come through the Emerging Markets ETF route, which means any uptick in flows to China could also lead to continued foreign investments in India,” added Meena.

Global Cues

A key highlight from last week was China's economic activity, where the People's Bank of China (PBoC) announced interest rate cuts and a reduction in the reserve requirement ratio, along with fiscal stimulus measures. This sparked a significant rally in both the Chinese and Hong Kong markets, leading to a surge in commodity prices. 

"The PBoC cut the amount of cash that banks must hold as reserves by 50 bps, the second reduction this year aimed at bolstering faltering economic growth," said Vishnu Kant Upadhyay, AVP, Research and Advisory at Master Capital Services.

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Global factors will play a pivotal role, especially in the absence of any major domestic events. US markets have been on a strong upward trajectory, with the Dow Jones Industrial Average (DJIA) nearing the upper boundary of its rising channel at 42,300. 

“A decisive breakout from this level could fuel further gains, though there is a possibility of consolidation if it fails to break through. Similarly, the S&P 500 and Nasdaq Composite are trending higher, indicating widespread participation across sectors. The ongoing global market strength and rotational buying across key sectors support continued market gains,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.

The market's outlook will be guided by major global economic data, such as the US Manufacturing PMI (September), US Services PMI (September), US Initial Jobless Claims, US Unemployment Rate (September), US Nonfarm Payrolls (September), and China Manufacturing PMI (September).

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“Domestically, liquidity remains robust, with signs of sectoral rotation from overvalued segments to areas with more attractive valuations. Movements in commodity prices, the US dollar index, and key macroeconomic data from the US will also be pivotal in shaping the market’s direction. Geopolitical developments will continue to be a key factor on the global stage,” said Santosh Meena of Swastika Investmart Ltd.

Oil Prices

Global crude oil prices settled higher on Friday but reported a weekly loss, and reversing gains picked up after the US Fed pivot as investors weighed expectations for higher global supply by the Organisation of Petroleum Exporting Countries (OPEC) against fresh stimulus from top crude importer China.

Brent crude futures settled up 38 cents, or 0.53 per cent, at $71.89 per barrel. Front-month US West Texas Intermediate crude futures settled up 51 cents, or 0.75 per cent, at $68.18. On a weekly basis, Brent settled down around three per cent, while WTI fell by around five per cent. Back home, crude oil futures settled flat to ₹5,694 per barrel on the multi commodity exchange (MCX).

Also Read: Oil reports weekly loss on OPEC+ supply bets against China’s fresh stimulus; WTI down 5%, Brent sheds 3% to $71
 
 

Corporate Action

Shares of several major companies, including ADS Diagnostics Ltd, Accelya Solutions India Ltd, and KPI Green Energy Ltd, among others, will trade ex-dividend from Monday, September 30. Some stocks will also trade ex-split and ex-bonus this week. Check full list here

Technical View

Ajit Mishra of Religare Broking Ltd said, “The Nifty is now targeting 26,500, potentially reaching 27,000, especially if IT stocks show momentum alongside other major sectors. In the event of a dip, the 25,700-25,900 zone is expected to provide support.”

Traders are advised to adopt a ‘buy on dips’ strategy, focusing on sectors like energy, auto, healthcare, and real estate while being selective in other areas. Additionally, caution is recommended when trading in the midcap and smallcap segments, as these broader indices have been underperforming.

Also Read: Nifty 50 September rejig: Bharat Electronics, Trent to enter NSE index on Sept 27; Divi’s Lab, LTIMindtree excluded

According to D-Street experts, if Nifty remains above the 25,800 mark, the bullish trend will likely stay intact. Market sentiment remains positive, with immediate resistance at 26,500, and a breakout above this level could propel the index towards 26,650.

Bank Nifty rallied strongly over the last two weeks, hitting an all-time high of 54,467.35, but faced some profit booking this week. "The key resistance is now at 54,500, and a break above this could take the index towards 55,000. On the downside, support is at 53,200; if broken, it may fall to 52,700. With the overall sentiment still positive, a "buy on dip" approach is recommended for traders looking to enter," said Vishnu Kant Upadhyay of Master Capital Services.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.