The Indian market started the week in red reacting to a slew of data and news that spoiled investor sentiment.
Poor GDP data, weak auto numbers and the mega bank merger announcement weighed heavily on the markets. However, some respite came later in the week when domestic institutional investors (DIIs) took charge and bought equities worth Rs 4,462.44 crore.
In the week ended September 6, Sensex ended 351.02 points lower at 36,981.77, while Nifty was down 77.05 points at 10,946.2.
In the broader markets, midcap index was down 0.76 percent, while Smallcap Index was up 0.48 percent amid strong DII flows and selling from foreign investors last week.
On the sectoral front, realty underperformed with a loss of 4.8 percent during the week, while metal index provide some support to the indices.
A long bull candle formed during the week and ended on Friday with Nifty above the intraday resistance of 10,920. This can be an indication of near term bottom formation at the swing low of 10,746, also signaling more upside in the near term, said Nagaraj Shetti, Technical Research Analyst, HDFC securities.
A small body of negative weekly candle was formed this week with long lower shadow (as per weekly timeframe chart). Technically, this formation signals a bullish hammer pattern. This is positive indication and signals more upside in the next week, he added.
Here are 10 key things that will keep the traders busy this week:
Note: The market will be shut on September 10 due to Muharram.
De-escalation of US-China trade concerns
After a failed dialogue in July, the two nation will go for a second round of negotiations in October at Washington.
The top brass of US and China will meet sometime early next month, while preliminary talks will begin from late September.
White House economic adviser Larry Kudlow said on Friday that talks between American and Chinese trade negotiators could "heat up" during meetings in October, though he was unsure of the outcome of the talks.
"The principals will meet in early October. The deputies will meet in a couple of weeks. So I can't predict an outcome, not here to do that. All I'm saying is the talks are continuing. You might say they're now going to heat up when the Chinese team comes here," Kudlow said in an interview with CNBC.
October's talks would be the first in-person, high-level discussions since a failed US-China trade meeting in July spurred US President Donald Trump to move forward with fresh tariffs on virtually all Chinese imports that had been untouched by the trade war between the two countries.
"China is eating the tariffs," Trump said on Twitter, repeating his claim that higher duty rates meant Washington collected billions of dollars from the Asian economy, and not US importers.
Crude
Oil prices rose above $61 per barrel after US Federal Reserve Chairman Jerome Powell said the central bank will act "appropriately" to sustain an economic expansion in the world's biggest economy that has been pressured by uncertainty over global trade.
Earlier the prices had fallen after US government data showed the nation's job growth slowed in August for the seventh month in a row, with non-farm payrolls expanding by 130,000.
The prolonged trade dispute between the United States and China has had a dampening effect on oil prices, though they have risen over the year, partly due to production cuts led by the Organization of the Petroleum Exporting Countries and Russia.
Rupee
The Indian rupee continued its winning momentum for a third session in a row on Friday, rising 12 paise to settle at 71.72 against the US dollar as signs of easing trade tensions between the US and China enthused investors.
On a weekly basis, rupee lost 30 paise to the US dollar, however, it has appreciated by 67 paise in the last three trading sessions.
In a major boost to investor sentiment globally, China and the US have agreed to hold the next round of trade negotiations in Washington in early October to end the bruising trade war.
USD/INR is expected to gain in coming holiday truncated week with downside support at 71.40 and resistance at 72.25, said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
F&O Cues
Maximum Put OI (Open Interest) was at 10,800 (which will act as strong support for the September series) followed by 10,600 strike while maximum Call OI was at 11,500 (which will act as strong resistance at Sept series) followed by 11,200 strike.
Minor Call writing at 11,200 strike, while Put writing was seen at 10,500 and 10,900 strike. Option data suggests a trading range in between 10,700 to 11,200 zones.
"Nifty PCR-OI has increased from 1.08 to 1.24 as the Nifty has been finding support near 10800. This has come along with a recovery in global markets, which should support the Nifty from witnessing any major decline," said Amit Gupta of ICICIdirect.com
"Volatility index is still at elevated levels and traders have opted to write Put options due to increased premiums, which justify the increasing PCR-OI of Nifty," he added.
Technical view:
The Nifty witnessed a dip and a recovery in the week gone by. However, it posted a negative close. After an indecisive session on Thursday, the Nifty witnessed some recovery on Friday.
Nifty has entered the near term resistance zone of 10,920-10,950. The recovery can continue for couple of sessions if the bulls manage to push harder. In that case, the index can stretch towards 11,050-11,100. The plausible move on the upside will be the last leg of a potential running triangular pattern post which the Nifty can resume the larger downtrend.
On the flip side, failure to sustain above 10,950 would indicate start of the next down leg right away. A crucial trend line support on the downside is near 10,800 below which it will be the test of the August low i.e. 10,637, said Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.
Macro Data
On the economic data front, Industrial Production data for the month of July will release on September 12.
Also, CPI Inflation for the month of August will be announced on September 12, while WPI Inflation data for the month of August will be released on September 16.
FII Flow
Foreign Institutional Investors (FIIs) have remained sellers since July, while on the other hand Domestic Institutional Investors (DIIs) have provided adequate support.
FII sold shares worth net Rs 5,272.91 crore, while DIIs bought net Rs 4,462.44 crore worth of shares in the Indian equity market in the last week, as per provisional data.
Board Meetings
Corporate Action
Here are corporate actions taking place in coming week:
Source: BSE
Global cues
Here are global data points to watch out for in coming week:
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