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

Bulls took a breather after a run-up in the previous four weeks. The benchmark indices closed a volatile week ended November 18 moderately lower amid a lack of domestic triggers.

The BSE Sensex was down more than 100 points to 61,663, and the Nifty50 fell over 40 points to 18,308, while the Nifty Midcap 100 and Smallcap 100 indices declined 1.5 percent and 1 percent respectively.

The sectoral trend was also mixed with the banking & financial services, and technology stocks ending higher, whereas auto, FMCG, energy and pharma fell between 1-2 percent.

The week beginning November 21 is also expected to be volatile as we have a monthly expiry and there will be no major trigger on the domestic front, hence all eyes are on global cues including US Fed minutes, with movement in oil prices and US bond yields, experts said.

"With all the major events behind us, participants will take cues from the global markets and crude and currency market movement. Besides, the scheduled monthly expiry of November month derivatives contracts would keep the traders on their toes," Ajit Mishra, VP - Research at Religare Broking, said.

He largely expects a further consolidation citing mixed trends across sectors and restricted participation from index majors.

Recent easing in Producer Price Index (PPI) and inflation numbers indicated that there could be softening in hike aggression by the US Federal Reserve, but recently Fed official James Bullard raised caution among market participants as he insisted on more rate hikes to bring inflation under control.

Hence the upcoming Fed minutes due on November 24 are important to watch out for. Fed has raised interest rates by 75 basis points four times till November meetings, taking the central bank's benchmark overnight borrowing target range to 3.75-4.00 percent, which experts feel could reach up to 5 percent.

Also the market participants will watch out for speeches by several Fed officials ahead of Fed minutes on Thursday.

That apart, speeches by several European Central Bank officials will also be keenly watched in the coming week, given the record high inflation due to rising energy prices. ECB has been raising interest rates since July to control inflation, which is much above its 2 percent target set for medium term.

Given the inflation in the UK is at 41-year high of 11.1 percent on rising energy and food prices in October against 10.1 percent in September, speeches by several Bank of England officials during the week ahead will also be closely monitored by global investors.

Another factor to watch out for would be the US dollar index that could see some kind of volatility ahead of Fed minutes.

The US dollar index has been trading below 110 for the last couple of weeks. In fact, after a further fall in inflation for October, the US dollar index hit around three-month low earlier this week (105.34), but then rebounded a bit to around 107 levels.

The move in US 10-year Treasury yield will also be watched, which also inched up later this week to close at 3.779 percent, after falling up to 3.67 percent earlier, though there was no major change on weekly basis.

Some kind of volatility may also be seen in the Indian rupee next week. The currency appreciated from around 83 against the dollar, record low levels, to nearly two-month high of around 80.8 due to weakness in dollar and fall in oil prices, but in the last week it weakened and closed at 81.68 on Friday due to rising dollar after hawkish remarks by Fed officials.

"Dollar-Rupee spot is likely to move higher towards 82.00-82.40 levels in the next week as a recent slump in the currency shall prompt importers to make opportunistic dollar purchases," Heena Naik- Research Analyst - Currency, Angel One, said.

Also, the dollar Index has changed its path to north due to hawkish remarks from Fed officials and stronger-than-expected retail sales data which could further influence the trend of dollar-rupee negatively, she added.

Meanwhile, oil prices have remained below $100 a barrel for more than two-and-half-months now, supporting Indian equities as well as currency. International oil benchmark Brent crude futures closed at $87.62 a barrel last week.

Foreign institutional investors were net sellers for some days last week, but remained net buyers during the week and total monthly buying reached to nearly Rs 13,000 crore in November, helping the Nifty50 surpass current year's high.

If the flow continues, the Nifty at record high can't be ruled out in coming weeks, experts said. Hence for this, all eyes will be on Fed move and dollar movement.

Given the volatility in FII flow, domestic institutional investors might have provided good support to the market last week, buying more than Rs 2,200 crore worth of shares, though on a monthly basis they have net sold shares worth Rs 3,369 crore.

All the five companies will make their grand debut on the bourses next week after completing the IPO. On Monday, speciality chemical company Archean Chemical Industries and non-banking finance company Five Star Business Finance will list their shares on the BSE and NSE.

Archean Chemical shares traded at more than 25 percent premium in grey market, while Five Star Business Finance showed a discount. The former's issue price was Rs 407 per share, and the latter's Rs 474.

That apart, Kaynes Technology India will list on November 22, Inox Green Energy Services on November 23, and Keystone Realtors on November 24. Amongst them, analysts said electronics manufacturing company Kaynes Technology traded at more than 30 percent premium in the grey market while other two saw muted response.

The Nifty50 has managed to defend not only 18,200 but also 18,300 mark --  both are going to act as immediate support levels followed by crucial support at 18,000 mark. On the higher side, 18,400-18,450 is expected to be a resistance area for the index.

The index has formed a bearish candlestick pattern on daily charts, while on the weekly timeframe, there was Spinning Top kind of pattern formation, indicating indecisiveness among bulls and bears, but sometimes Spinning Top formation at the top of an uptrend might indicate that bulls may be losing momentum after consistent northward journey. The index gained more than 6.5 percent in previous four weeks.

"Technically, intraday reversal formations and bearish candle on weekly charts indicate indecisiveness between the bulls and bears. Further to our perception, the medium term index formation is still on the positive side," Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities, said.

Hence, he feels buying on short term correction and selling on rallies would be the ideal strategy for traders.

"18,200 would act as a key support zone and on the flip side 18,400 and 18,550 could be important hurdles. Below 18,100 uptrend would be vulnerable," the market expert said.

Option data indicated that in the immediate term the Nifty50 may trade in the range of 18,000-18,500 levels.

We have seen maximum Call open interest at 18,400, which could act as a near term resistance for the index, followed by 19,000 and 18,500 strikes, with Call writing at 18,400 strike then 18,300 strike.

On the Put side, the maximum open interest was seen at 18,300 strike, indicating immediate support for the Nifty50, followed by 18,000 strike, with writing at 18,300 strike then 17,900 strike.

"As per the option statistics, 18,400 is an immediate hurdle with the highest open interest on the Call side. As the Put-Call ratio is at 0.89, which is oversold territory, a decisive move above 18,400 could result in a short-covering rally," Pravesh Gour of Swastika Investmart said.

On the other hand, he feels 18,300 is the immediate base with the most open interest on the Put side, while 18,000 is a significant support. "The long exposure of FIIs in index futures stands at 65 percent, which suggests their positive bias."

The volatility index India VIX has seen a gradual fall in the last one month, hitting a one year low during the last week, providing good comfort for bulls and support for the market and indicating low possibility of major correction in coming days, experts said.

India VIX, the so called fear index, closed at 14.39 levels on Friday, largely unchanged on week-on-week basis but on monthly basis fell significantly from 17.45 levels seen on October 18.

Mindtree, Easy Trip Planners, Maharashtra Seamless, Commercial Syn Bags, Dev Information Technology, Mafatlal Industries, and Veer Energy will be in focus ahead of their corporate actions.