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Dalal Street Week Ahead | 10 key factors that will keep traders busy

Overall, the coming week, a truncated one, may continue to see volatility and consolidation, with focus on global cues as well as Reliance Industries AGM, macroeconomic data points, and monthly auto sales numbers, experts said

August 28, 2022 / 11:11 AM IST
Stock Market News

Stock Market News

The market finally ended its five-week winning streak and closed down more than 1 percent as volatility reigned through the week ended August 26 with weak global cues, rising uncertainty over growth outlook, rate hike fears, spike in oil prices, and higher European energy prices.

The BSE Sensex corrected more than 800 points to 58,834, and the Nifty50 declined 200 points to 17,559, as technology, pharma, financial services, select FMCG and auto stocks were under pressure.

However, there was outperformance by the broader markets due to upside in last three sessions, hence the Nifty Midcap 100 and Smallcap 100 indices gained 0.35 percent and 1.5 percent during the week.

On Monday, the market may react negatively to Fed Chair Jerome Powell's comments saying that the rate hikes will continue to bring inflation at 2 percent target, at the cost of pain in consumers and businesses, but overall, the coming truncated week is expected to continue to see volatility and consolidation, with focus on global cues as well as Reliance Industries' AGM, macroeconomic data points, and monthly auto sales numbers, experts said.

"The market might continue with its consolidation as global economic data points towards weakness, while Brent crude has again crossed $100 a barrel and dollar index continues to remain firm at 108 levels," Siddhartha Khemka, Head - Retail Research at Motilal Oswal Financial Services, said.

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On the other hand, FII buying amidst weak global cues and revival of demand ahead of festive season is providing support at lower levels to the market, he added.

Ajit Mishra, VP - Research at Religare Broking, reiterated his view of focusing more on risk management during this corrective phase and suggest continuing with stock-specific trading approach until the Nifty resume the trend.

The market will remain shut on August 31 for Ganesh Chaturthi.

Here are 10 key factors that will keep traders busy next week:

1. Reliance Industries 45th AGM

In the beginning of next week, the market participants will closely watch the 45th Annual General Meeting of index heavyweight Reliance Industries which will start at 2 pm on August 29, with speech and presentations by Chairman Mukesh Ambani and other key members.

Analysts feel the company may continue to focus on its consumer retail business with likely announcements on a time line for the listing of Jio Platforms and Reliance Retail. Apart from this, some expectations may be with respect to new energy business, roll out of 5G mobile phone services, any kind of strategic investment in the company’s oil-to-chemicals and green energy business.

2. Auto Sales

In the beginning of September, all eyes will be on monthly auto sales numbers. Hence auto stocks including Tata Motors, Maruti Suzuki, Bajaj Auto, Mahindra & Mahindra, Eicher Motors, TVS Motor, Ashok Leyland, and Hero MotoCorp will be in focus in later part of the next week.

Analysts largely expect the trend in August to be similar to July, with growth momentum continuity in commercial vehicle space amid strong growth in cargo and passenger segments.

Further, "passenger vehicle volumes should be higher, thanks to the large order book and increase in production. In addition, 2-wheeler volumes would improve due to inventory build-up with dealers in the run-up to the festive season," Emkay said. However, tractor volumes are likely to decline due to muted sentiment, on uneven spread of monsoons and lower sowing acreage.

3. Economic Data Points

Most of announcements on the economic front will be seen between Wednesday and Friday next week. The GDP growth for quarter ended June 2022 will be keenly eyed by the market participants who expect double-digit growth with opening of all economic activities including services and trade.

Barclays forecasts India's economic growth accelerated to 16 percent YoY in Q2CY22 or June FY23 quarter. "The robust sequential recovery in place since Q2-2021, when COVID-19's Delta variant forced widespread lockdowns, likely hit another high in Q2-2022. The economy was fully opened, with all activity restrictions removed. While some supply headwinds were evident in the form of lingering intermediate-good shortages and higher input costs, we expect both the domestic goods and services sectors to show impressive recoveries in Q2 2022," Rahul Bajoria, MD & Chief India Economist said.

Apart from GDP, fiscal deficit & infrastructure numbers for July month will also be announced on coming Wednesday.

S&P Global Manufacturing PMI data for August will be released on Thursday, while foreign exchange reserves for week ended August 26 will be released on Friday.

4. FII Flow

There was a bit of slowdown in FII inflow compared to previous weeks, with US dollar index trading above 108 levels, and increasing fear of more rate hikes by Federal Reserve to bring inflation to its target of 2 percent at the cost of economic pain in consumers and businesses.

FIIs remained net buyers to the tune of Rs 450 crore for the passing week, taking total monthly inflow to over Rs 18,000 crore in August against profit booking by DIIs who sold more than Rs 6,500 crore worth of shares in current month.

Hence, in coming week, the street will closely watch movement in US dollar index amid the announcements of US unemployment rate for August, and US initial jobless claims for week ended August 27, along with speeches by Fed officials.

5. Other Global Data Points

Here are key global data points to watch out for next week:

Image122782022

6. Oil Price

The movement in oil prices will also be important to focus as international benchmark Brent crude futures reclaimed $100 a barrel mark again after indications from Saudi Arabia that OPEC+ may cut output, closing with 4.4 percent gains during the week at $100.99 a barrel on Friday.

Any increase in oil prices is always negative for oil importing countries like India. Hence, sustaining above $100 a barrel could bring some more volatility in the equity markets, experts said.

7. Technical View

The Nifty50 has seen a formation of bearish candle on the daily charts and there was Hanging Man as well as Evening Star kind of pattern formation on the weekly scale, indicating a bit of correction or profit booking in coming session but the major fall is unlikely with capping of upside. The index gained 36 points on last Friday, but lost more than one percent for the week.

After hitting a long downward sloping resistance trend line, the index failed to sustain the same followed by trading in broad range of 17,300-17,800 levels. Overall the volatility and consolidation are expected to continue in short term, as the index has, so far, has taken a support at 17,300, hence the breaking of same can bring the index near 17,000 mark, whereas the decisive close above 17,800 can push the index above psychological 18,000 mark, experts said.

"The short term trend of Nifty is range bound with volatility and the consolidation movement is expected to continue for the next week," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

He expects Nifty to trade in a range of 17,800-17,300 levels by next week. Any decisive breakout on either side is likely to accelerate momentum in the market, he said.

8. F&O Cues

The Option data also indicated a trading range of 17,300-17,800 levels in an immediate term, while the broader range is expected to remain in between 17,000 to 18,000 levels.

We have seen maximum Call open interest at 18,000 strike, which can be a crucial resistance level going ahead, followed by 18,500 strike, with Call writing at 18,700 strike then 18,300 & 18,500 strikes.

The maximum Put open interest was seen at 16,500 strike, which could be crucial support level in coming sessions, followed by 17,000 & 17,500 strikes, with Put writing at 17,500, and 17,000 strikes.

Going ahead, ICICI Direct also believes the current consolidation in the Nifty may continue amid broader market performance, before fresh directional move.

9. Primary Market Activity

With the closing of maiden initial public offering last week, DreamFolks Services is expected finalise the share allotment by September 1. The refunds will be credited to the bank accounts of unsuccessful investors by September 2, as per the schedule provided by the company.

On the last day of next week, i.e. September 2, Tamilnad Mercantile Bank will open its anchor book for a day, before the issue opening for subscription for public on September 5.

10. Corporate Action

Here are key corporate actions taking place in the coming week:

Image112782022

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Sunil Shankar Matkar
first published: Aug 28, 2022 11:11 am
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