Market forecast – What to expect this week?

2 May 2023 , 02:40 PM

The highlight of this week will be the announcement of the next interest rate move by US Federal Reserve. This will happen on Wednesday. The broader expectation is that it will go for a 25-basis point (0.25%) hike and may also announce the end of current cycle of interest rate hikes. 

First Republic Bank has failed. This should make Federal Reserve officials see the damage that their aggressive interest rate hike policy has caused. After the shutting down of First Republic Bank, JPMorgan Chase has taken over the $93 billion worth of deposits of the latter. It has also taken over the majority of the $200 billion of assets of First Republic Bank. 

Corporate results will continue to affect the course of Indian equity markets this week. Banks are posting good March quarter results. So banking stocks may see buying demand strengthening this week. Some cement companies have posted disappointing March quarter results. So their stocks may see selling pressure this week.

Inflation remains a challenge at the global level. Bank of Sweden has again raised interest rates by 0.5% to 3.5%. It further added that interest rate hikes will again be made in June and September. The desperation on the part of central banks, because of their inability to control inflation, is reflected from the advice of the Bank of England’s Chief Economist to workers to not ask for pay hikes and to firms to not pass higher costs to customers. 

US home accessories retail chain Bed, Bath & Beyond has filed for bankruptcy. The brick-and-mortar stores operator has failed to emerge from the shock of two years of Covid lockdowns and restrictions.  Big technology companies in US have posted good March quarter results. Meta’s revenue in March quarter increased y-o-y by 3%. Microsoft and Alphabet have also posted good results. 

On the technical front, Nifty 50 is likely to see support at 17,860. Resistance is seen at 18,135. 

A Buy call is being given on the stock of PCBL for this week. Target price is Rs 138. Stop Loss is Rs 121.

A Buy call is also being given on the stock of Indian Oil Corporation for this week. Target price is Rs 90. Stop Loss is Rs 78.