Market outlook for next week (05-May to 09-May)

8 May 2025 , 03:49 PM

SECTORAL STORY FOR THE WEEK TO MAY 02, 2025

The week to May 02, 2025 saw Nifty and Sensex gaining +1.28% and +1.63% respectively. During the week, FPIs were net buyers in Indian equities to the tune of $1,180 Million; amidst growing risk-on optimism. Here are 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (02-May)	Index (25-Apr)
Nifty India Defence	5.99%	7,038.45	6,640.65
Nifty Oil & Gas	4.38%	11,261.05	10,788.65
Nifty Realty	2.58%	881.55	859.35
Nifty Infrastructure	2.39%	8,794.50	8,589.30
Nifty Mobility	2.26%	19,414.60	18,986.25
Nifty Automobiles	1.33%	22,286.50	21,994.50
Nifty Healthcare	1.00%	13,968.25	13,829.80
Nifty IT	0.93%	35,891.85	35,562.25
Nifty Chemicals	0.88%	29,287.58	29,031.18
Nifty Banks	0.83%	55,115.35	54,664.05
Nifty Private Banks	0.73%	27,396.40	27,198.55
Nifty MNC	0.53%	26,904.90	26,764.10
Nifty India Digital	0.47%	8,391.30	8,352.45
Nifty PSU Banks	0.29%	6,554.45	6,535.50
Nifty CPSE	-0.30%	6,195.90	6,214.35
Nifty FMCG	-0.50%	56,252.25	56,532.35
Nifty Metals	-0.60%	8,518.40	8,569.75
Nifty Capital Markets	-0.84%	3,713.25	3,744.55
Nifty Non-Banks	-0.96%	27,244.85	27,510.25
Nifty Consumer Durables	-0.97%	36,583.30	36,941.50

Data Source: NSE

Out of 20 sectoral indices 14 sectors gave positive returns, while 6 sectors gave negative returns although negative returns were relatively muted. Defence and oil & gas were the big gainers in the week. While defence gained on hopes of new orders and the Rafale Deal; oil & gas gained on sharp fall in crude prices, as well as stellar results by Reliance Industries. Although there were 6 sectors giving negative returns; all of them were less than 1%.

Overall, average returns of the 20 sectors stood at 1.02%. The top 10 sectors gave an average return of 2.26%, while the bottom 10 sectors delivered average returns of -0.22%. A total of 5 sectors gained more than 2% for the week, with 2 sectors gaining over 4%. Consumer durables, FMCG, NBFC and capital market stocks came under pressure this week.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

The one factor that boosted the markets in the week was the sharp fall in the price of Brent Crude to $60/bbl after Saudi Arabia decided to boost supplies. Also, there were talks of the US moving closer to a trade deal with the EU, Japan, South Korea, and India and that was also a sentiment booster. FPIs were net buyers worth $1,180 Million, infusing $4.21 Billion in last 3 weeks. IIP for FY25 came in sedate at 4.0%, albeit on a much higher base.

The big risk factor continued to be the geopolitical situation, including the border situation after the terror attacks. To add to concerns, US GDP contracted -0.3% in Q1-2025, but PCE inflation was also lower. Lower growth raises questions over tech spending and US full year growth. At a policy level, India faced another setback with Zoho calling off its semiconductor plans as it could not find a technology partner. Earlier Adani had also called off chip plans.

STOCK MARKET TRIGGERS FOR COMING WEEK TO MAY 09, 2025

Here are key triggers that could influence stock markets next week.

• Markets will be closely watching the action on how the border situation pans out and how close India gets to a trade deal with the US. As of now, the FPIs have not given too much importance to the Pahalgam attacks, and flows have continued.
  
• The big event in the coming week will be the US Fed policy announcement. Despite GDP contraction and lower PCE inflation, the Fed is unlikely to cut the Fed rates, and that could only deepen the schisms between the US President and the Fed Chair.
  
• Crude oil prices will be on the radar, after it cracked nearly 10% in the week to $60/bbl, after Saudi Arabia decided to expand supplies, even at lower prices. For India, the lower crude prices would be positive as it eases the trade deficit concerns.
  
• The Ather Energy IPO will list next week and there is likely to be pressure on the stock after the overall subscription was just about 1.47 times. Also, the HNI / NII portion got subscribed just about 66%, indicating lack of appetite for funded applications.
  
• Key global data points. Composite PMI, Fed Policy, Trade Deficit, Atlanta Fed Q2 GDP, Crude Inventories, initial jobless claims, Fed Speak (US). PMI, ECB Financial Services Review (EU); PMI, BOJ Minutes (Japan); PMI, CPI, Trade Surplus, New Loans (China); and PMI, HPI, MPC Minutes (UK).

What does this mean for Nifty and Sensex in the coming week to May 09, 2025.

PARTING THOUGHTS ON MARKET INDEX LEVELS

VIX bounced from above 17.16 levels to 18.26, reflecting the higher geopolitical risk. Markets would be keen to see VIX taper, but that looks unlikely in this scenario.

• Nifty closed the week at 24,347 Spot. Nifty has immediate support at 24,194 and major support at 23,843. Immediate resistance is at 24,544 and later at 24,895. Nifty stays a long play till it decisively breaks below 24,098 with volumes. Shorts only after that.
  
• Sensex closed the week at 80,502 Spot. Sensex has immediate support at 80,054 and major support at 79,045. Immediate resistance is at 81,064 and later at 82,073. Sensex is a long play, till it breaks below 79,664 with volumes. Shorts have to wait till then.

More than the data flows, the next week will be about how the geopolitical situation pans out. Markets may continue to be jittery till then. Next week, the focus will be on Fed policy; but the bigger pivot will be on FY25 GDP data in the end of May 2025!