Karnataka Election Results: How Markets Are Likely To Behave Next Week?

After hitting the five-month high level on Friday, the BSE Sensex is set to start the new week on Monday. The markets this week will be guided by FIIs’ momentum, the final round of Q4 earnings, and global cues. Apart from this, the impact of the Karnataka lection results is also to be seen.

Santosh Meena, head (research) at Swastika Investmart Ltd, said, “The recently concluded Karnataka election has resulted in the Congress emerging as the clear winner. While this may have a sentimental negative impact on the market, much of this outcome has already been factored in by investors. Therefore, it is unlikely that we will witness a significant reaction from the market in response to this development.

He also said the market will be influenced by FIIs’ momentum, the final round of Q4 earnings, and global cues the next week.

“The Indian stock market has regained its bullish momentum following a week-long pause, driven by strong inflows from Foreign Institutional Investors (FIIs). FIIs have been net buyers for ten consecutive trading sessions, and their continued momentum is likely to remain a significant factor influencing market direction in the coming days,” he added.

Meena also said that as we head into the final round of Q4 earnings, investors will be closely monitoring the results from State Bank of India (SBI), which are expected to be a key driver of sentiment. Additionally, after from Karnataka election results, the impact of key economic indicators such as the Consumer Price Index (CPI) and Index of Industrial Production (IIP) numbers will also be closely watched at the start of next week.

“While global cues are relatively muted, market participants will be keeping a watchful eye on the direction of US markets, bond yields, and the dollar index, which could potentially impact Indian equities,” he said.

The Nifty has been displaying a consistent upward trend since April, successfully surpassing the significant resistance level of 18,200. Currently, the key resistance level stands at 18,440, which represents a 78.6 per cent retracement of the previous decline from 18,888 to 16,828.

While there is a possibility of some profit-taking around this level, a break above it could potentially lead to further gains towards the 18,630-18,690 range. On the downside, the immediate support level is at the 9-day moving average (DMA) of 18,200, followed by the 20-DMA at 18,000, with a cluster of 100 and 200-DMA at 17,800, which would act as significant support levels during any correction.

On Friday, May 12, benchmark BSE Sensex recovered from early lows to close at a five-month high, riding on gains in banking and auto stocks. The 30-share index gained 123.38 points or 0.20 per cent to settle at 62,027.90, the highest closing level since December 12, 2022.

The broader NSE Nifty edged up 17.80 points or 0.1 per cent to close at 18,314.80 points. The 50-stock index rose by 245.8 points on a weekly basis, marking its third straight week of gains.