Heads up! Top 10 factors that will dictate market trends in coming week
The Nifty50 closed with losses of 1.2 per cent, while the S&P BSE Sensex fell 0.8 per cent for the week ended October 22. In terms of sectors, the banks and finance stocks outperformed, while selling was seen in the consumption, metal, and realty stocks
Mixed global cues, as well as muted earnings from India Inc., failed to hold the momentum, which took benchmark indices to record highs in the week gone by.
The Nifty50 closed with losses of 1.2 per cent, while the S&P BSE Sensex fell 0.8 per cent for the week ended October 22. In terms of sectors, the banks and finance stocks outperformed, while selling was seen in the consumption, metal, and realty stocks.
The S&P BSE Mid-cap index was down over 4 per cent, while the S&P BSE Small-cap index fell over 5 per cent for the week ended October 22.
Investors preferred to book profit at higher levels. The coming week is also likely to remain volatile amid results from India Inc., and October month expiry. On the micro front, investors will also keep an eye on the Infrastructure output data for September, and the Foreign Exchange Reserve data on October 29, Friday.
“Markets witnessed profit-taking at higher levels last week, citing subdued earnings announcements and mixed global cues. The news of the vaccination drive crossing the milestone of the 1-billion mark also failed to trigger any meaningful rebound,” Ajit Mishra, VP Research, Religare Broking, said.
“We expect choppiness to continue due to the scheduled monthly expiry and prevailing earnings season. On the macroeconomic front, the core sector data will be released on October 29,” he said.
We have collated a list of 10 factors that will dictate the trend for markets in the coming week:
The D-Street will react to the earnings of Reliance Industries, which declared its results post-market hours on Friday, and ICICI Bank came out with the September quarter numbers on Saturday.
RIL, the largest company by market capitalization, reported a 46 per cent year-on-year (YoY) growth in the net profit to Rs 15,479 crore during the second quarter of the financial year of FY2021-22 (Q2FY22), the company said in an exchange filing on Friday.
ICICI Bank announced its quarter ended September 30, 2021 results on 23 October. The Bank's profit after tax surged by 30% y-o-y to Rs 5,511 crore in Q2 2022.
Over 600 companies to report Q2 results:
As many as 646 companies on the BSE will declare their results for the September quarter starting from October 26 to October 30.
We have a long list of index heavyweights announcing their numbers next week. Axis Bank, Kotak Bank, IndusInd Bank, Ambuja Cement, Bajaj Auto, ITC, L&T, Maruti Suzuki, Cipla, Dr. Reddy's, Gail, Vedanta are some of the prominent names to watch out for in the coming week.
As many as two companies will hit the D-Street to raise over 5,000 cr -- Nykaa Fashion, and Fino Payment Bank.
FSN E–Commerce Ventures, a digital native consumer technology platform that runs Nykaa and Nykaa Fashion plan to raise Rs 5,351.92 crore through its public issue at the upper price band. The issue will open on October 28, and close on November 1. The price band has been fixed at Rs 1,085-1,125 a share.
“There will be some buzz in the primary market too, with FSN E-Commerce Ventures IPO, operator of Nykaa beauty stores, opening for subscription from Oct 28,” Ajit Mishra, VP Research, Religare Broking, said.
Fino Payment Bank initial offering will open on 29 October for subscription and close on 2 November.
If we talk about the data, then both FIIs and DIIs are in a selling mode. FIIs sold worth Rs 7,350 cr and DIIs sold worth Rs 4,505 cr in the cash market last week.
“FIIs' long exposure in the index future stands at 62%, while PCR is sitting at the 0.82 mark, which is an oversold territory and that may lead to a short-covering bounce in the market,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.
October F&O Expiry:
The market is expected to remain volatile as traders will roll over their positions from the October series to November series on Thursday, 28 October.
Keep an eye on Nifty Bank:
The banking stocks outperformed benchmark indices for the week ended October 22. The NiftyBank rose 2.5 per cent, the Nifty PSU Bank was up nearly 4 per cent compared to 1.2 per cent fall seen in the Nifty50.
The Nifty Bank hits a fresh record high of above 40,000 for the first time in the week gone by. It hit a record of 40,587.35. The index closed 0.7 per cent higher at 40,323.
The Nifty Bank, on the other hand, has been an outperformer in the past two weeks, hitting a fresh all-time high of 40,587. “Price action continues to remain strong, and the index is on course to test levels of 41,000-42,000 in the coming session with 39,000 as a key support area,” Aditya Agarwala, Senior Technical Analyst, YES SECURITIES, said.
“Any decline or an intermediate throwback to support levels of 39,000 can be used as an opportunity to go long in the index and banking stocks with a target of 41,000-42,000,” he said.
FPIs have turned sellers in the Indian equity market in October. According to depository data, FPIs have sold equity worth Rs 2331 cr till 22nd October. This is not yet a trend reversal, but there are signs of sustained selling to come.
“FPIs have sold software stocks worth Rs 5406 cr in the 1st half of October, even though the Q2 results of software companies were good. So, this is a clear case of profit booking. FPIs have been buyers in financial services,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
“In debt also FPIs were sellers in October. Selling in debt is to the tune of Rs 2324 till 22nd. Broadly the FPI data indicates that FPIs are likely to be cautious sellers in the market, going forward, unless the market turns resilient again,” he added.
Sovereign Gold Bond Scheme:
The next tranche of Sovereign Gold Bonds 2021-22 (Series VII) will open for subscription on Monday, October 25, 2021, the Reserve Bank of India (RBI) informed. The subscription period will close on October 29, while the date of issuance is on November 2, 2021.
The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and BSE.
The rupee weakened by 3 paise to end at 74.90 against the US currency on Friday, weighed down by a muted trend in domestic equities and firm crude oil prices, said a PTI report. Brent crude futures, the global oil benchmark, advanced 0.43 per cent to USD 84.97 per barrel.
“The USDINR spot has been on a bearish note this week tracking the fall in dollar index and higher risk appetite. The consolidation may continue even next week as the focus will be on tonight’s US flash PMI data, Reuters expect flash PMI to be mixed," Emkay Global said in a report.
"But, if next week’s US PCE data shows price growth being steady, then it will advocate that inflation is transitory, limiting any rally in DXY. The USDINR ATM Volatility has been below 5% this week, and the option max pain is at 74.50 strike," it said.
The report further added that even next week we expect the spot to oscillate in between 74.50-75.25. A break of 74.50 may push the spot to 74.10-74 zone.
The Nifty50 closed 1.2 per cent lower for the week ended October 22. The index, which surpassed 18600 for the first time on October 19, failed to hold on to the momentum and closed just above 18,100 levels.
The recent pullback seen from highs suggests that there is some selling pressure at higher levels and investors should tread with caution.
“Technically, the Nifty formed a dark cloud cover candlestick formation on the weekly charts which is a sign of a short-term reversal but we have to wait for follow-up for confirmation,” says Meena of Swastika Investmart Ltd.
“On the daily chart, it is trading near the critical support zone of 18000-17950 zone where we can expect a bounce back. On the upside, 18250-18300 will be the immediate supply zone while 18400-18450 will be the next resistance zone,” he said.
Meena further added that if the Nifty slips below the 17,950 level then there is a risk of any meaningful correction where 17600 will be the next important support level.
Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.
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