It was a historic week for the market as the benchmark indices scaled fresh record highs. The BSE Sensex surpassed the 60,000 level and managed to hold it at close, led by tech, capital goods, energy and select auto stocks.
The other factors that boosted the market sentiment were - the easing of nervousness around Evergrande crisis after an injection of $18.6 billion by the China's central bank in the banking system; US Fed meet outcome; buying by domestic institutional investors; and stellar run in real estate stocks.
The market continued its uptrend for the fifth consecutive week ended September 24. This week, the BSE Sensex rose 1,032.58 points, or 1.75 percent, to 60,048.47, and the Nifty50 jumped 268.05 points, or 1.52 percent, to 17,853.20, taking the five-week gains to 8.5 percent in each index.
But the broader markets failed to match the momentum as the BSE Midcap index was up 0.59 percent and Smallcap index gained 0.06 percent.
Going ahead, in the absence of any major domestic cues, the market is expected to focus on global developments for direction and could see some volatility given the expiry of September futures & options contracts in the coming week, experts feel.
"The volatility seen in the markets this week may seep into the forthcoming week as well given the monthly expiry towards the latter half. With no major domestic economic data expected in the following week, markets may be dominated by global news flows such as another interest payment on Evergrande's bond due next Wednesday," said Samco Research.
Thus, in the current volatile market, investors must carefully invest only in fundamentally sound stocks as markets are fickle and unpredictable, Samco advised.
Here are 10 key factors that will keep traders busy next week:
Coronavirus and Vaccination
With significant progress in vaccination across the country, the daily addition of infections count consistently stayed below 35,000 in the last week with falling positivity rate below 2 percent, which seems to be one of reasons that boosted confidence among market participants and as a result the market made history with the Sensex crossing 60,000 mark for the first time.
Kerala, Maharashtra, Tamil Nadu, Mizoram and Andhra Pradesh remained at the top to add Covid on daily basis.
More than 71.04 lakh doses of Covid vaccines were administered in the last 24 hours ended at 8 am on Saturday and as a result of which, India vaccinated more than 84.89 crore people so far. With this, nearly 46 percent of population has been vaccinated with first dose and more than 16 percent of population in the country fully vaccinated now.
Multiplex & Realty Stocks in Focus
Multiplex chain operators, which had been reeling under pressure of loss, could see a sigh of relief especially after Maharashtra government has taken a decision to reopen theatres and auditoriums with effect from October 22, with condition of safety measures, especially after looking at Covid cases and vaccination data. Maharashtra Chief Minister Uddhav Thackeray in a tweet said the standard operating procedure (SOP) for the reopening of theatres and auditoriums is in the works and will be declared soon.
Hence, the PVR and Inox Leisure, which has been witnessing roller coaster ride in the current year so far, could see some buying interest in the coming week, experts feel.
Meanwhile, realty stocks saw huge buying interest in the ended September 24 as the BSE Realty index hit a record high of 4,067.71, before closing with gains of 21.3 percent at 4,002.46 and saw 1,000 points rally in the last one month. Stocks including Oberoi Realty, DLF and Mahindra Lifespace Developers also hit a record high. So the sector could be in action next week.
Aditya Birla Sun Life AMC, the last initial public offering in the current month will open next week on September 29 and will close on October 1. The price band for the offer has been fixed at Rs 695-712 per equity share.
The IPO of Aditya Birla Sun Life AMC, the jointly owned company by Aditya Birla Capital and Sun Life (India) AMC Investments Inc, is a complete offer for sale by both the shareholders. They will together sell 3,88,80,000 equity shares through IPO.
Paras Defence and Space Technologies will make its debut on Dalal Street in later part of the week on October 1 after its issue being subscribed 304 times, the highest among IPOs launched atleast since 2007.
The final issue price is expected to be fixed at Rs 175 per share, the upper end of price band. Considering the massive subscription demand, strong product portfolio & technology, and robust growth potential, Paras Defence shares traded at Rs 405-425 per share in the grey market, a premium of Rs 230-250 or 131-143 percent over expected issue price of Rs 175, the IPO Watch and IPO Central data showed.
Auto sales for the month of September, which will start flowing in from October 1, will be closely watched by the street. Experts largely feel the sales are expected to be impacted by the chip shortage but the same could improve towards later part of Q4CY21.
"Considering the increased concerns around chip shortage and the resultant dampened sales prospects, monthly sales numbers of the automobile sector are sure to grab eyeballs to determine a future trend in auto stocks," said Samco Research.
Auto stocks including Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Eicher Motors, Bajaj Auto, TVS Motor Company, Ashok Leyland, Hero MotoCorp and Escorts will be in focus. So far the auto sector has been a big underperformer in the current financial year so far.
FIIs & DIIs
In the absence of FII flow, the domestic institutional investors have safeguarded the Dalal Street last week and pushed the benchmarks to uncharted territory. In fact they, especially newage investors, remained supportive since March 2021 when the FIIs remained net sellers during that period. So both the flow will be closely watched going ahead, though experts feel there could be some FII outflow if the Fed tapering begins towards the end of CY21 but nothing to worry.
DIIs have net bought Rs 3,048 crore worth of shares, whereas foreign institutional investors have net sold Rs 8.38 crore worth of shares in the week ended September 24. In the current month so far, they remained net buyers to the tune of Rs 1,030.37 crore and Rs 7,137.72 crore respectively.
The Nifty50 formed small bearish candle which resembles Spinning Top kind of pattern formation on the daily charts, while there was bullish candlestick formation on the weekly charts. The index gained 0.17 percent on Friday and rallied 1.52 percent during the week.
Given the significant run up, the market could see some consolidation and volatility with resistance at 18,000 and the support at 17,600 levels in the coming week, experts feel.
"A small negative candle was formed on the daily chart with minor upper and lower shadow. Technically, this action signal a formation of Spinning Top type candle pattern at the highs. Normally such formations after a reasonable upmove or at the hurdle more often act as a downward reversal pattern," said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.
He further said Nifty on the weekly chart formed a long bull candle, which has overlapped previous bull candle. This signals that the uptrend as per medium term is intact and any minor weakness of short term is unlikely to have any sharp negative impact on uptrend of the market.
On the conclusion, he feels the Nifty seems to have encountered resistance again at the new highs and the overall positive trend remains intact and expected minor weakness is unlikely to damage the uptrend status of the market. "Hence, any weakness down to the support of 17,600 levels could be a buy on dips opportunity. The near term upside target to be watched around 18,200-18,300 for the next 1-2 weeks."
The option data is largely indicating that the Nifty could see in the range of 17,500-18,000 levels in the coming week. Maximum Call open interest was seen at 18500 followed by 18000 and 17900 strikes, while maximum Put open interest was seen at 17000 followed by 17500, 17700 & 17800 strikes. Call writing was seen at 18500 then 18000 & 17900 strikes with unwinding at 17700 and 17800 strikes, while Put writing was seen at 17900 then 17700 & 17800 strikes with unwinding at 17600 strike.
"The maximum options pain of the September series at 17,600 levels. These levels are expected to act as immediate support for the
Nifty. Above these levels, once should adopt a buy on decline strategy," said ICICI Direct. "Moreover, due to quarter ending, index rebalancing and fund flows are likely to keep the directional bias intact in the coming week."
On an immediate basis, they believe the Call base at 18000 should act as a psychological hurdle in the near term.
"Despite the sharp up move, the volatility index has remained high and ended the week near 17 percent. While closure among Call writers can be attributed to the upmove seen in the volatility index, it has not subsided in line with the global markets suggesting caution at higher levels. Hence, long positions should be kept with stop loss below the major Put base of 17600," said the brokerage.
India VIX, which measures the expected volatility in the market, jumped to almost 18 mark before settling at 16.92 from 15.23 on week-on-week basis. "Spurt in India VIX in last few sessions have given a volatile swing and now it has to cool down below 15-14 zones to continue the smooth ride of the market," said ICICI Direct.
Corporate Action and Economic Data Points
Here are key corporate actions taking place in the coming week:
On Thursday, fiscal deficit and infrastructure output for August, and current account data for Q1FY22 will be released. Markit Manufacturing PMI for September and foreign exchange reserves for the week ended September 24 will be released on Friday.
Global Data Points
Indebted property developer China's Evergrande Group could be in news in the coming week as its another interest payment on bond due on Wednesday. "It faces a series of such semiannual coupon payment dates in the coming months, with $46 million due September 29 and $721 million more due on offshore bonds between October and December, according to Fitch Ratings. Reports by Nikkei Asia (for reference only - https://asia.nikkei.com/Business/Markets/China-debt-crunch/China-Evergrande-misses-bond-payment-deadline#:~:text=Evergrande%2C%20which%20is%20running%20out,offshore%20dollar%20bond%20on%20Thursday.)
Here are key global data points to watch out for next week: