After taking losses for two strigh weeks, the market changed the course in the Diwali week ended November 4 driven by buying across all sectors with fall in volatility. Strong GST collection and supportive global cues also aided the market's up move.
Investors were on the edge through the week ahead of the decision by the US Federal Reserve which left rate unchanged with continuing accommodative stance but decided to reduce the monthly pace of its net asset purchases by $10 billion for treasury securities and $5 billion for agency mortgage-backed securities later this month.
The BSE Sensex climbed 760.69 points, or 1.28 percent, during the week to close at 60,067.62 and the Nifty50 jumped 245.15 points, or 1.39 percent, to 17,916.80, while the broader market outpaced benchmarks with the BSE Midcap and Smallcap indices rising 2.83 percent and 3.28 percent, respectively.
After an extended weekend, the market is now expected to consolidate in the coming week, experts feel. The key triggers for the market this week will be inflation, last batch of corporate earnings, FII flows, global cues and IPOs.
"Given a slew of significant economic data releases and the ongoing earnings season, the volatility experienced this week is expected to persist into the forthcoming week as well. The United States and China's inflation figures will influence global markets," said Yesha Shah, Head of Equity Research at Samco Securities.
Ajit Mishra, VP Research at Religare Broking also feels indications are in the favour of further consolidation however the range could be broader next week. "Amid all, we are still seeing noticeable action on both sides so participants should maintain their focus on stock selection and overnight risk management."
Here are 10 key factors that will keep traders busy next week:
We are at the end of September 2021 quarter earnings season. More than 2,100 companies will release their earnings scorecard in the coming week including prominent names like Britannia Industries, Aurobindo Pharma, Bosch, Mahindra & Mahindra, Power Grid Corporation, Bank of Baroda, Zomato, Tata Steel, Coal India, Grasim Industries, Hero MotoCorp, Hindalco Industries and ONGC.
Among others, Sobha, Shankara Building Products, Ujjivan Small Finance Bank, Wockhardt, Astrazeneca Pharma, BHEL, HEG, Indraprastha Gas, MRF, Petronet LNG, Affle India, Berger Paints, Glenmark Life Sciences, India Cements, Krishna Institute of Medical Sciences, Mazagon Dock Shipbuilders, Metropolis Healthcare, Nuvoco Vistas Corporation, Oil India, Pidilite Industries, Tata Teleservices, Balkrishna Industries, Bharat Dynamics, Engineers India, Godrej Consumer Products, HUDCO, Natco Pharma, NHPC, NMDC, Power Finance Corporation, Prestige Estates Projects, RailTel Corporation, Suryoday Small Finance Bank, Zee Entertainment Enterprises, Amara Raja Batteries, Apollo Hospitals Enterprise, Ashok Leyland, Mrs Bectors Food Specialities, Bharat Forge, Burger King, Force Motors, Glenmark Pharma, Motherson Sumi Systems, NALCO, NBCC, Paras Defence, Suzlon Energy, Ashoka Buildcon, Godrej Industries, Ipca Labs, JK Cement, PNC Infratech, Sadbhav Infrastructure Project, Shalimar Paints, Sterling and Wilson Solar, Thyrocare Technologies, and Vivimed Labs will also announced quarterly earnings next week.
The coming week is going to be busy for primary market as three companies - Paytm, Sapphire Foods and Latent View Analytics - will open their initial public offerings, and will raise in total nearly Rs 21,000 crore.
Parent One97 Communications will open Rs 18,300-crore Paytm IPO, the largest-ever IPO in history, between November 8 and November 10. Before this, state-run coal mining company Coal India had mopped up Rs 15,475 crore via IPO in October 2010. The price band for the offer has been fixed at Rs 2,080-2,150 per share.
KFC and Pizza Hut operator Sapphire Foods will launch its Rs 2,073-crore IPO on November 9. The price band for the offer, which will close on November 11, has been fixed at Rs 1,120 to Rs 1,180 per share.
Data analytics services Latent View Analytics will be the third public issue which will open for subscription during November 10-November 12, with a price band of Rs 190-197 per equity share. The company plans to mobilise Rs 600-crore via public offer.
Apart from IPOs, banker-turned-businesswoman Falguni Nayar-owned FSN E-Commerce Ventures, the operator of Nykaa and Nykaa Fashion chain is expected to make its debut on the BSE as well as NSE on November 11. The Rs 5,351.92-crore IPO was subscribed 81.78 times during October 28-November 1 and was trading at a price of Rs 1,775 in the grey market, a premium of Rs 650 or 58 percent over expected final issue price of Rs 1,125 per share, the IPO Watch and IPO data showed.
Fintech company Fino Payments Bank is also likely to list its equity shares next week, on November 12 after the Rs 1,200-crore issue being subscribed 2.03 times during October 29-November 2, 2021.
The share allotment of both IPOs will get finalised in the first half of the next week.
Also, Policybazaar (owned by PB Fintech), Sigachi Industries and SJS Enterprises will finalise their share allotment next week, after closing IPOs on November 3.
Inflation & Industrial Output
Another key factor to watch out for would be economic data including inflation for the month of October and industrial output data for September, which will be important ahead of RBI monetary policy meeting in December 2021.
Retail inflation in September fell to five-month low at 4.35 percent against 5.3 percent in previous month, which is still in the RBI's target range of 4 percent (+/-2 percent). India's industrial production in August increased by 11.9 percent as per the data by National Statistical Office.
"As long as inflation remains a concern, even D-Street investors will closely monitor domestic inflation rate, which has remained within the RBI's comfort zone. However, an inflation rate that is sustainably higher than its tolerance level, coupled with the stance adopted by FED on the interest rate hike this week, may nudge the RBI to consider adopting a hawkish stance and begin policy tightening sooner than anticipated," said Yesha Shah of Samco Securities.
Globally, markets will also closely watch US as well as China inflation numbers which are scheduled to be release on November 10.
FIIs flow, which is always critical for the market, has been in negative terrain for the third consecutive week and will be closely watch in coming months especially after the Federal Reserve decided to reduce bond purchases from later this month.
They have net offloaded Rs 686.85 crore worth of Indian equities in the passing truncated week, on top of Rs 25,572 crore of selling in October 2021.
"FIIs' behavior will be the most critical element from here because they are selling continuously and if they stick with their current mood then we can expect that correction can see the further extension," said Santosh Meena, Head of Research at Swastika Investmart.
However, domestic institutional investors managed to support the market to some extent, as they net bought Rs 344 crore worth of shares in addition to Rs 4,471 crore of buying in October.
The movement of US bond yields and Dollar index will also be watched as the former corrected from 1.56 percent to 1.45 percent, and later rose to 94.20 from 94.12 on week-on-week basis. As a result, the Indian rupee appreciated from 74.91 to 74.19 against the US dollar in same period.
The fear of coronavirus subsided further as the daily count of addition of cases consistently reported below 15,000 since October 28, with recovery rate having above 98 percent and positivity rate below 1.5 percent, largely due to increase in vaccination across the country. Only Kerala reported maximum number of Covid cases (6,580) in the last 24 hours ended at 8 am on Saturday, while rest of states had cases in single-to-three digits.
More than 107 crore Covid vaccine doses have been administered, so far, in the country, of which 31.55 percent people completed their second Covid vaccine dose, and the rest are done with first dose.
But still it is the crucial factor to watch out for given the rising cases in some countries like Russia, France, Colombia, Italy, Germany, Poland, Switzerland, Austria, Ireland etc.
The Nifty50 formed bearish candle which to some extent resembles Doji kind of pattern on the daily charts and there was bullish candle formation on the weekly scale, as the index gained half a percent on Thursday and 1.4 percent for the week.
Experts feel the market structure still seems to be weak and rangebound till the Nifty trades below the crucial 18,000-18,200 zone.
"Nifty is respecting its 50-DMA (17,674) however the near term texture is weak. 18,000-18,200 is a critical resistance area where we can again see selling pressure. If Nifty manages to take out this zone then we can say that correction has ended and the market is ready for fresh expansion," said Santosh Meena.
On the downside, he feels if Nifty slips below its rising 50-DMA that may coincide with the 17,700 level then the index is expected to see further weakness towards the 17,450-17,250 zone.
Maximum Call open interest was seen at 18000 strike, followed by 18300 & 18500 strikes. Call writing was seen at 18300 strike, then 18400 & 18500 strikes, with Call unwinding at 17800 strike.
Maximum Put open interest was seen at 17000 strike, followed by 17500 & 17800 strikes. Put writing was seen at 17000 strike, then 17700 & 17900 strikes. This option data indicated that open interest distribution in the weekly expiry is very wide between 17,000 and 18,000 levels, indicating that 18,000 could be immediate resistance, experts feel.
"The Nifty November series has started with little over 10 million shares, which is relatively low compared to the last couple of months. We have not seen major movement with low open interest. Furthermore, as the Nifty has breached its major Put base of 18000 and October series VWAP (volume-weighted average price) of 18100, these levels should act as immediate hurdle on the higher side," said ICICI Direct.
On downsides, the brokerage expects major Put base of 17500 to act as support for the Nifty
Volatility index, which measures the expected volatility in the market, fell by 9.64 percent to 15.75 levels, from 17.43 levels on week-on-week basis, which experts feel could support bulls if it slips below 15 mark.
Here are key corporate actions taking place in the coming week:
Here are key global data points to watch out for next week:
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