As there are no major events on the global and domestic front, it could be another week of consolidation for the market
The tussle between bulls and bears continued for the third consecutive week as the benchmark indices closed flat, though the Sensex hit a historic high in the week ended November 22.
The Nifty50 tried very hard to hold the psychological 12,000 mark, backed by index heavyweight Reliance Industries (RIL) amid likely tariff hike buzz, but failed to hold the same level due to lack of firm global and domestic cues. The broader markets also closed flat.
As there are no major events on the global (barring US-China trade developments) and domestic front, it could be another consolidation week for the market and expiry of November futures and options contracts may increase volatility, experts said, adding hence the stock specific action is likely to continue.
"Markets are likely to remain lackluster the coming week. Movements will occur based on news and events that are likely to transpire from the government in terms of economic policies, disinvestment and international geo-political events. Statistically, November is a bullish month but the month end going ahead looks rather quiet and dull," Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote told Moneycontrol.
Vinod Nair, Head of Research at Geojit Financial Services said the Nifty50 is trading at one year forward P/E of 19x & 26x on 12-month trailing basis which does not provide much leeway to perform in the short-term. "Considering this, Nifty is likely to trade in a range of 11,600-12,000," he added.
Foreign institutional investors continued to support the market as they net bought Rs 4,700 crore worth of shares in the week gone by, taking total November inflow to Rs 8,126 crore on top of Rs 8,595.66 crore buying in previous month, supported by improving global liquidity amid bond buying program of European Central Bank and US Federal Reserve.
Here are 10 key factors that will keep traders busy this week:
US-China trade talks
The uncertainty over whether the world's largest economies United States and China will be able to reach a partial trade deal continued, though the US markets closed higher on November 22 after positive comments from both countries over the deal.
Earlier, as per media reports the partial deal was supposed to be signed in the mid of November and now we are in the last week of the same month. In fact, US President Donald Trump has been saying both countries are close to sign the partial deal but that has not happened yet.
Hence, globally the developments over US-China trade will be closely watched.
On Friday, US President Donald Trump told Fox News a trade deal was "potentially very close" following remarks by President Xi Jinping that Beijing wanted to work out an initial agreement.
Recently a media report indicated that trade war could be extended to 2020 and US lawmakers passing two bills supporting protesters in Hong Kong, which could complicate US-China talks, Reuters said.
Chinese President Xi Jinping on November 22 said his country wants to work out an initial trade pact with the United States and has been trying to avoid a trade war but is not afraid to retaliate when necessary.
China has invited top US trade negotiators for a new round of face-to-face talks in Beijing as efforts continue to strike at least a limited deal, the Wall Street Journal on November 21 said, quoting unidentified sources.
Crude oil prices
The oil prices remained favourable for India as it has been in the range of $60-65 a barrel for last two months. India imports more than 85 percent of oil requirement.
The continued uncertainty over US-China trade deal raised concerns over global oil demand and that kept a lid on oil prices, though recently there were expectations of an extension to OPEC+ production cuts.
Reuters on November 21 reported that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by three more months to mid-2020 when they meet over December 5-6.
International benchmark Brent crude futures settled at $63.39 a barrel on Friday.
The rebalancing of MSCI indices will take place on November 27, hence there could be stock-specific action and buying in following stocks, which are included in MSCI India index.
On November 7, the MSCI Inc, a research-based indexes and analytics services provider, decided to include Berger Paints India, Colgate-Palmolive, DLF, HDFC Asset Management Company, ICICI Prudential Life Insurance, Info Edge, SBI Life Insurance and Siemens India in its MSCI India Index.
Four stocks -- Glenmark Pharma, Indiabulls Housing Finance, Vodafone Idea and Yes Bank will be excluded from the index.
Under MSCI India Domestic Index, MSCI Inc added eight scrips - Berger Paints, DLF, HDFC AMC, ICICI Prudential, Indraprastha Gas, Info Edge, SBI Life and Siemens India whereas deleted BHEL, Glenmark Pharma, Indiabulls Housing Finance, L&T Finance, Vodafone Idea and Yes Bank.
Under its MSCI Global Small Cap Indexes, the index maker added 13 stocks and removed 21 scrips which are:
All weekly and monthly futures and options contracts will be expired on November 28 and traders will roll over their positions for next month, hence there could be volatility in coming week.
Put writers were active in 11,900 and 11,800 strikes where maximum open interest concentration is placed at 11,900 strike while maximum Call open interest is at 12,000 followed by 12,100 strike. Meaningful Call writing is at 12,000 then 11,950 strike while minor Put writing is at 11,850 and 11,800 strikes.
"Continuous call writing at 12,000 strike in the monthly expiry is hinting that upside is still capped. The option band indicates trading range of 11,800-12,000," Nilesh Jain of Anand Rathi said.
"Volatility has again declined, which indicates towards more active positioning from option writers. Put writing positions have shifted higher to 11800/11900, which may keep the Nifty above 11,850 in the expiry week. The short covering leg may be seen as we approach expiry," Amit Gupta of ICICI direct said.
India VIX fell by 1.06 percent from 15.03 to 14.87 levels. Lower VIX suggests limited momentum in the market.
GDP Q2 data
The key macro data point to watch out for in the coming week would be July-September quarter gross domestic product (GDP) which scheduled to be released on November 29.
Most experts feel the GDP print could be below 5 percent against 5 percent in Q2FY20, but there could be recovery in second half of this year especially after government measures.
"GDP is expected to be below the 5 percent. It is probable that the forecasted growth of 6.1 percent for FY20 is likely to be downgraded further," Vinod Nair, Head of Research at Geojit Financial told Moneycontrol.
Prabhudas Lilladher also said, "As against GDP growth of 5 percent in Q1FY20, we estimate around 4.5 percent growth in Q2 and gradual recovery there after."
Among others, infrastructure output and government budget value for October, and foreign exchange reserves for week ended November 22 will also be announced on same day.
The Nifty50 remained in a wider trading range of 11,800-12,050 level and faced stiff resistance at psychological 12,000 mark, which has been acting as crucial resistance zone, during the week gone by.
On the weekly scale, the index formed Doji candle for third consecutive week which indicates a tug of war between bulls and bears while on Friday, it formed Bearish Belt Hold kind of pattern on daily charts.
Experts expect the index to remain in the above mentioned range in coming week as well and needs decisive close above 12,000 levels which can easily help it surpass earlier record high of 12,103.
"We would like to reiterate our cautious stance on index. The index is not yet out of the woods and the major breakout is still awaited which is placed at its all-time high of 12,103, while on the downside 11,800 has been acting as a crucial support. One should focus on stock specific action," Nilesh Ramesh Jain, Derivative and Technical Analyst at Anand Rathi told Moneycontrol.
"However, taking a little cautious step won't harm anyone as we all know precaution is better than cure. The Nifty index is still making higher top - high bottom formation, thus if the bulls manage to drag the index on their side and push it above its resistance of 12,103 levels then a possibility of an upmove towards 12,300 then 12,450 levels cannot be ruled out," he said.
The subscription for Rs 410-crore initial public offering of CSB Bank will remain opened for two-more day and will close on November 26. The IPO was fully subscribed on first of bidding itself, backed by strong retail support with 5.6 times subscription.
The two-day offer for sale issue of state-owned engineering consultancy company RITES will close on November 25. The government will sell 2,50,00,000 equity shares and has an additional option to sell up to 26,80,654 shares in case of oversubscription through this OFS. The floor price has been fixed at Rs 293.50 per share and retail investors will get shares at a 5 percent discount to the cut off price.
The buyback offer of Pennar Industries will open on November 25. The maximum buyback price would not exceed Rs 45 per share for an aggregate amount not exceeding Rs 40 crore.
Training services provider NIIT Limited will also open its 2.68 crore shares' buyback offer on November 25. The offer price has been fixed at Rs 125 per share.
The important corporate action to watch out for would be -- MOIL will go ex-buyback on November 26 and November 27 will be its record date for determining the entitlement and the names of the eligible shareholders who will be eligible to participate in the buyback of over 2.02 crore shares.
Here are other corporate actions taking place in coming week:
Apart from US-China trade developments, here are other key global data points to watch out for in coming week:
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