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Last Updated : May 12, 2019 11:12 AM IST | Source: Moneycontrol.com

10 key factors that will keep traders busy this week

Earnings, along with elections, will continue to be a key factors in the coming week.

Sandip Das @Im_Sandip1

Indian market bounced back from its 100-days exponential moving average (EMA) for the second consecutive day in a row on Friday but failed to reverse losses and closed with a bearish candle on the daily charts for the eight consecutive day in a row.

The Nifty50 for the week closed 3.7 percent lower. The broader market outperformed as the Nifty Midcap index gained 0.47 percent while the Nifty Smallcap index rose 0.57 percent.

The index consolidated for the second consecutive day in a row near its 100-days EMA. Going forward, 11,250 will be important for bulls if they have to regain control of D-Street. A break below this level could take the index towards 200-DMA placed at 11,020 levels, suggest experts.

Close

The Nifty50 which opened at 11,314 rose to an intraday high of 11,345 before bears took control and pushed the index below 11,300 levels for the first time since March 2019. The index touched an intraday low of 11,251 before closing the day at 11,278 - down 22 points.

"Albeit Nifty50 closed below 11,300 levels, it appears to be making an attempt to consolidate around 11,250 levels as it registered a bearish candle on the daily charts whereas a robust bear candle was witnessed on the weekly charts suggesting that trend may be slowly tilting in favour of bears," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

India VIX moved up by 3.36 percent to 26.33 levels. However, higher VIX suggests that volatile swings could continue in the market ahead of election polls and outcome.

"The Nifty index continued its weakness for the eighth consecutive trading session as every bounce was being sold in the market. It formed a Bearish Candle on daily as well as on the weekly charts which implies that bears are continuously putting pressure at higher levels," Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities told Moneycontrol.

Here are 10 key things to watch out for in coming week:

Earnings

Earnings will continue to be a key factor in coming weeks and as it is a year-end, the season will continue till May-end. More than 400 companies are scheduled to report their results for quarter ended march this week.

FMCG major ITC is scheduled to come out with its March quarter earnings on May 13, 2019. ICICIdirect expects ITC to report net profit at Rs 3,226.5 crore up 10 percent year-on-year (up 0.5 percent quarter-on-quarter). Net Sales are expected to increase by 8.3 percent Y-o-Y (up 2.1 percent Q-o-Q) to Rs 11,463.3 crore.

Kotak Institutional Equities expects ITC (Standalone) to report net profit at Rs. 3,160.4 crore up 7.8 percent year-on-year (down 1.5 percent quarter-on-quarter).

HDFC is scheduled to come out with its March quarter earnings on May 13. Research and broking firm Motilal Oswal expects HDFC to report net profit of Rs 2,374 crore. Net Sales are expected at Rs 2,900.3 crore, the report added. The numbers are not comparable on a YoY basis as the company will be giving out results with a different accountancy standard (IndAS).

Emkay Global Financial Services expects HDFC’s loan growth to remain healthy at ~17 percent backed by increasing market share in individual loans.

Elections

The ongoing elections would continue to be on top of everyone's mind in the short term along with corporate earnings. Polling for 59 Lok Sabha

constituencies across six states and one Union Territory in Phase 6 of the general election will be held on May 12.

The last phase of general elections will be held on May 19 and counting of all votes will take place on May 23.

Macro Data

Consumer Price Index (CPI) on YoY basis is scheduled to be released on May 13, while inflation data for the month of April is slated to be released May 14, 2019.

Foreign exchange reserves data for week that ended on May 10 will be released on May 17 and Trade Balance is scheduled for May 15, 2019.

F&O Cues

On the options front, maximum Put OI is placed at 11,000 followed by 11,500 strikes while maximum Call OI is seen at 12,000 followed by 12,500 strikes.

Call writing is seen at 12,000 followed by 11,800 strikes while Put writing is seen at 11,300 followed by 11,500 strikes. Options band signifies a shift in a lower trading range of 11200 to 11700.

US-China Trade War

The ongoing tariff war between two of the biggest economies will be in focus as US President Donald Trump ratcheted up tariff threat after talks show no progress.

Trump on Friday ordered his trade chief to begin the process of imposing tariffs on all remaining imports from China, underscoring a lack of progress by US and Chinese negotiators in talks aimed at ending an escalating trade war.

FIIs & DIIs

Foreign portfolio investors have offloaded shares worth Rs 150 crore during the first four trading sessions of May. They had poured around Rs 9,000 crore last month.

"The FII outflow in May is not very significant as compared to Rs 62,000 crore invested by FIIs into Indian equities during February- April 2019. Hopes of improving macros (steady GDP growth, moderating inflation and prediction of normal monsoon) and stable government at the centre has attracted FIIs to the Indian markets in 2019," said Jayant Manglik, Retail Distribution, Religare Broking Ltd.

Rupee

The Indian rupee today rebounded after falling beyond 70 against the US dollar. The rupee fell 70.06 as US-China trade war hit emerging market currencies. Rupee later traded ended higher at 69.91 as compared to Thursday's close of 69.94.

USD/INR (May) contract closed at 70.1075 on May 9. The contract made its high of 70.1950 on May 9 and a low of 69.4850 on May 7. The 14-day Exponential Moving Average of the USD/INR is currently at 69.78. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 51.67. Rupee is likely to stay above 69.60 and move higher towards 70.40.

Crude

Crude oil may move in narrow range of 4,250-4,480 levels. Short term Forecast from EIA showed that it expects some tightness in global oil markets during Q2and Q3 of 2019, but anticipates that growing production in US and key OPEC countries will ensure that global supplies continue to meet demand moving forward.

Global Cues

US jobless claims dipped to 2,28,000, a decrease of 2,000 from the previous week's unrevised level of 2,30,000. US trade deficit widened to $50.0 billion in March from a revised $49.3 billion in February.

Japan's consumer confidence weakened to the lowest level in more than three years in April. The consumer confidence index for households with two or more persons fell to a seasonally adjusted 40.4 in April from 40.5 in March.

China's consumer price index rose 2.5 percent year-on-year in April, following a 2.3 percent increase in March, in line with economists' expectations. The latest inflation was the highest since last October.

Technical Outlook

The Nifty50 for the week closed 3.7 percent lower. The broader market outperformed as the Nifty Midcap index gained 0.47 percent while the Nifty Smallcap index rose 0.57 percent.

"The Nifty index continued its weakness for the eighth consecutive trading session as every bounce was being sold in the market. It formed a Bearish Candle on daily as well as on the weekly charts which implies that bears are continuously putting pressure at higher levels," Chandan Taparia, derivative & technical analyst at Motilal Oswal Securities told Moneycontrol.

"It is forming lower highs-lower lows from past five trading sessions and holding below its 50-DEMA which indicates weakness. Now till it remains below 11,350 zones, weakness could continue towards 11,188 then 11,050 zones while on the upside hurdle is seen at 11,333 then 11,420 zones," he said.

India Union Budget 2019: What does Finance Minister Nirmala Sitharaman have up her sleeve? Click here for top and latest Budget news, views and analyses.
First Published on May 12, 2019 10:34 am
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